Engro Fertilizers Profile 2018

contents
Company Overview
Company Information 09
Notice of Annual General Meeting 10
2018 at a Glance 12
Our History 13
Our Footprint 15
Our Milestones 17
Calendar of Major events in 2018 19
Core Values, Code of Conduct and Ethics 21
Ownership Structure 23
Board of Directors 25
Directors’ Profile 27
Management Team 33
Organizational Structure 35
Our Brands 37
Significant Factors Affecting the External Environment 49
Strategic Objectives 50
Resource Allocation Plan 51
Risks and Opportunities 53
Corporate Governance
Board Committees 63
Functional Committees 64
Our Governance Framework 65
Stakeholders’ Engagement Policy 71
Report of Audit Committee 72
Auditor’s Review Report on Statement of Compliance with Code of Corporate Governance 74
Statement of Compliance with Code of Corporate Governance 75
Independent Assurance Report on Statement of Compliance
with the Sukuk (Privately Placed) Regulations, 2017 77
Statement of Compliance with the Sukuk (Privately Placed) Regulations, 2017 79
Financial Review
Chairman’s Message 84
CEO’s Message 86
Key Numbers 88
Directors’ Report 89
Forward Looking Statement 98
Quarterly Analysis 99
Horizontal and Vertical Analysis 103
Summary of Financial Information 109
Financial Ratios 110
Graphical Analysis 111
Statement of Value Addition and Distribution 117
Dupont Analysis 118
Cashflow Statement - Direct Method 119
Financial Statements
Auditor’s Report on Consolidated Financial Statements 124
Consolidated Financial Statements for the year ended December 31, 2018 131
Auditor’s Report on Standalone Financial Statements 191
Standalone Financial Statements for the year ended December 31, 2018 197
Other Information
Shareholder Information 255
Pattern of Shareholding 257
Categories of Shareholding 262
Key Shareholding and Shares traded 263
Proxy form 268
Standard Request Form 270
Electronic Credit Mandate Form 272
Standard Request Form (Urdu) 273
Proxy Form (Urdu) 275
Directors’ Report (Urdu) 292
company information notice of annual general meeting
Notice is hereby GIVEN that the Tenth Annual General Meeting of Engro Fertilizers Limited (the “Company”) will
be held at Karachi Marriott Hotel, Abdullah Haroon Road, Karachi on Thursday, March 28, 2019 at 10 a.m. to
BOARD OF DIRECTORS Microfinance transact the following business:
Mr. Ghias Khan (Chairman) Mobilink Microfinance Bank
Mr. Nadir Salar Qureshi (Chief Executive) Telenor Microfinance Bank
A) Ordinary Business 5) The Share Transfer Books of the Company will be
Mr. Abdul Samad Dawood
closed from Thursday, March 21, 2019 to
Mr. Asad Said Jafar AUDITORS 1) To receive and consider the standalone and
Thursday, March 28, 2019 (both days inclusive).
Mr. Asim Murtaza Khan A.F. Ferguson & Co. consolidated audited Financial Statements for the
The transfers received in order at the office of the
Mr. Javed Akbar Chartered Accountants year ended December 31, 2018 alongwith the
Company’s share registrar, M/s. FAMCO
Ms. Sadia Khan State Life Building No. 1-C, Directors' and Auditors' Reports thereon.
Associates (Private) Limited, 8-F, near hotel
Mr. Hasnain Moochhala I.I. Chundrigar Road Karachi-74000, Pakistan 2) To approve a final dividend at the rate of PKR Faran, Block 6, PECHS, Shahra-e-Faisal, Karachi
Tel: +92(21) 32426682-6 / 32426711-5 3.00 (30%) for the year ended December 31, PABX Nos. (92-21) 34380101-5 and email
CHIEF FINANCIAL OFFICER Fax +92(21) 32415007 / 32427938 2018. info.shares@famco.com.pk by the close of
Mr. Imran Ahmed 3) To appoint Auditors for the year 2019 and fix their business (5:00 p.m.) on Wednesday, March 20,
REGISTERED OFFICE remuneration. The present Auditors, A.F. 2019 will be treated to have been in time for the
Ferguson & Co., Chartered Accountants have purposes of payment of final dividend to the
COMPANY SECRETARY 7th & 8th Floor, The Harbor Front Building,
offered themselves for re-appointment. transferees and to attend and vote at the
Mr. Umair Mukhtar HC # 3, Marine Drive, Block 4, Clifton, meeting.
Karachi-75600, Pakistan 4) To elect eight (8) Directors in accordance with
BANKERS Tel: +92(21) 35297501-10 the Companies Act, 2017. The retiring Directors 6) A member entitled to attend and vote at this
are Mr. Ghias Khan, Mr. Abdul Samad Dawood, meeting shall be entitled to appoint another
Conventional Fax:+92(21) 35810669
Mr. Nadir Salar Qureshi, Mr. Hasnain Moochhala, person as his/her proxy to attend, speak and vote
Allied Bank Limited Website: www.engrofertilizers.com
Mr. Javed Akbar, Ms. Sadia Khan Mr. Asim instead of him/her, and a proxy so appointed
Askari Bank Limited www.engro.com shall have such rights, as respects attending,
Murtaza Khan and Mr. Asad Said Jafar.
Bank Al Habib Limited speaking and voting at the meeting as are
Bank Alfalah Limited SHARE REGISTRAR N.B. available to a member. Proxy forms, in order to
CIMB Bank M/s. FAMCO Associates (Pvt) Limited 1) In terms of the section 159(1) of the Companies be effective, must be received by the Company
Citi Bank .N.A. 8-F, Next to Hotel Faran, Block-6, PECHS, Act, 2017, the Directors of the Company have not less than forty-eight (48) hours before the
Deutsche Investitions und Shahrah-e-Faisal, Karachi, Pakistan fixed the number of elected Directors at eight (8). meeting. A proxy need not be a member of the
Entwicklungsgesellschaft (DEG) Tel: +92(21) 34380104-5, 34384621-3 Company.
2) Any person who seeks to contest election of
Faysal Bank Limited Fax +92(21) 34380106 Director shall file with the Company a notice of 7) In accordance with the provisions of section 242
Habib Bank Limited his/her intention to offer himself/herself for of the Companies Act, 2017, a listed Company is
Habib Bank Limited Dubai election as a Director along with the consent to required to pay cash dividend only through
Habib Metropolitan Bank Limited act as a Director in Form 28 under section 159(3) electronic mode directly in to the bank account
JS Bank Limited and section 167 respectively, of the Companies designated by the entitled shareholders.
Mashreq Bank Act, 2017 and a detailed profile along with office Accordingly, the shareholders are requested to
address for placement onto the Company’s provide the information mentioned on an
MCB Bank Limited
website in terms of SRO 634(I)/2014 dated July E-Dividend Mandate Form available at the
National Bank of Pakistan website of the Company to the share registrar.
10, 2014, not later than fourteen days before the
Samba Bank Limited date of meeting. The CDC account holders must submit their
Silk Bank Limited information directly to their broker (participant) /
Soneri Bank Limited 3) The selection of Independent Directors will be
Central Depository Company Limited.
complied with the requirements of section 166 of
Standard Chartered Bank (Pakistan) Limited 8) In accordance with the directives of the SECP,
the Companies Act, 2017 and Regulation 6 of
The Bank of Punjab Listed Companies (Code of Corporate the dividends of shareholders whose CNIC
United Bank Limited Governance) Regulations, 2017. copies have not been received by the Company
United Bank Limited Dubai shall not be electronically credited until receipt
4) Pursuant to Companies (Postal Ballot) Regulations
thereof. Therefore, the individual shareholders
2018, for the purpose of election of Directors and
Shariah Compliant who have not submitted their CNIC copies are
for any other agenda item subject to the
Bank Islami Pakistan Limited requested to send the same at the earliest to the
requirements of sections 143 and 144 of the
Al Baraka Islamic Bank (Pakistan) Limited share registrar of the Company. Corporate
Companies Act, 2017, members will be allowed to
Dubai Islamic Bank (Pakistan) Limited entities are requested to provide their NTN. While
exercise their right of vote through postal ballot, that
providing their CNIC/NTN, shareholders must
Meezan Bank Limited is voting by post or through any electronic mode, in
quote their respective folio numbers. The
Noor Bank accordance with the requirements and procedure
physical shareholders are requested to notify any
contained in the aforesaid Regulations.
change in their addresses to the share registrar
09 engro fertilizers annual report 2018 engro fertilizers annual report 2018 10
of the Company and in case of CDC
shareholders to their broker (participant).
I / We, __________________ of ________________
being a member of Engro Fertilizers Limited, holder of
__________ Ordinary Share(s) as per Register Folio
2018 at a glance
9) In compliance with section 150 read with Division
I of Part III of the First Schedule of the Income No / CDC Account No. ______________ hereby opt for
Tax Ordinance, 2001 withholding tax on dividend video conference facility at _________________.
income will be deducted for ‘filer’ and ‘non-filer’
shareholders at 15% and 20% respectively. A
‘filer’ is a taxpayer whose name appears in the
Active Taxpayers List (ATL) issued by the FBR
___________________
from time to time and a ‘non-filer’ is a person
Signature of Member
PKR 48 bn
other than a filer. To enable the Company to
withhold tax at 15% for filers, all shareholders are UPDATE UNDER S.R.O. 1240/1/2017
advised to ensure that their names appear in the Wealth Generated
latest available ATL on FBR website, otherwise Note relating to Engro Corporation Limited
tax on their cash dividend will be deducted at Engro Corporation Limited is the majority shareholder
20% for non-filers. Withholding tax exemption of Engro Fertilizers Limited. In 2016 the shareholders
from the dividend income shall only be allowed if approved a short-term loan / financing facility of up to
a copy of valid tax exemption certificate is made PKR 6 billion, which was initially for a period of one (1)
available to the share registrar of the Company year and renewal of the same for four (4) further
by the first day of book closure. periods of one (1) year each. This short-term facility
10) The FBR has clarified that in case of joint was not utilized during the year, however, it is being
account, each holder is to be treated individually renewed as earlier approved by the shareholders.
as either a filer or non-filer and tax will be PKR 92.2 bn PKR 19.5 bn
deducted on the basis of shareholding of each
joint holder as may be notified by the By the order of the Board Market Capitalization Contribution to
shareholder, in writing as follows, to the National Exchequer
Company’s share registrar, otherwise it will be
Karachi Umair Mukhtar
assumed that the shares are equally held by the
joint shareholders: February 8, 2019 Company Secretary
Company Folio / CDS Total Principal Shareholder Joint shareholder

Name Account No. Shares
Name & Shareholding Name & Shareholding

CNIC No. proportion CNIC No. proportion
No. of shares No. of shares
11) In pursuance to Circular No. 10 of 2014 dated

May 21, 2014, if the Company receives consent
from members holding in aggregate ten percent
(10%) or more shareholding residing at
AA (Long Term) 1,252
geographical location, to participate in the
meeting through video conference at least seven
A1+ (Short Term) Permanent
Employees
(7) days prior to the date of the meeting, the PACRA rating
Company will arrange video conference facility in
that city subject to availability of such facility in
that city. The Company will intimate members
regarding venue of video conference facility at
least five (5) days before the meeting along with
complete information necessary to enable them
to access such facility. In order to avail this
facility please provide the following information to 34%
our share registrar: Urea Market Share
11 engro fertilizers annual report 2018

our history
Our story begins with one company’s enterprising decision to strive ahead and invest The Company undertook its largest urea expansion project in 2007.
when another had bowed out. In 1957, Pak Stanvac – an Esso/Mobil joint venture –
stumbled upon vast deposits rich in natural gas in Mari while pursuing viable oil The state-of-the-art plant enVen 3.0, stands tall at 125 meters – dubbed the tallest
exploration in Sindh. With Pak Stanvac focused exclusively on oil exploration, the structure in Pakistan. The total cost of this expansion is approximately US $1.1 billion,
discovery shifted the impetus to Esso, which decided to invest on the massive with the expanded facility making Engro one of the largest urea manufacturers in
industrial potential of Mari gas field. Esso proposed establishment of a giant urea plant Pakistan, besides substantially cutting the cost of urea imports to national exchequer.
in Daharki, about ten miles from the Mari gas fields, which would use natural gas
produced as its primary raw material to churn out urea fertilizer. In 2013, the Company forayed into the capital markets to raise necessary capital
required to fund development capex on securing additional gas supplies along with
Talks with the Government of Pakistan bore fruit in 1964 and an agreement was signed restructuring of the balance sheet to optimize the capital structure of the company. The
allowing Esso to set up a urea plant with an annual capacity of 173,000 tons. Esso IPO was a roaring success, oversubscribed four times in the book building process
brought in state-of-the-art design, commercially tried facilities, and a highly whilst being oversubscribed for three times at the time of public issue.
distinguished pool of technical expertise to ensure a smooth start up. Total investment
made was US $46M – the single largest foreign investment in Pakistan to date then. As we forge ahead we aim to build on our world class experience of five decades to
The plant started production on December 4, 1968. forward our vision of transforming the agriculture landscape of Pakistan.
To boost sales, a full-fledged marketing organization was established which undertook

agronomic programs to educate farmers of Pakistan. As the nation’s first branded
fertilizer manufacturer, the Company helped modernize traditional farming practices
and boost farm yields, directly impacting the quality of life of the farmers and their
families, and the nation at large. Farmer education programs increased consumption
of fertilizers in Pakistan, paving way for the Company’s branded urea called “Engro” –
an acronym for “Energy for Growth”.
In 1978, Esso became Exxon as part of an international name change. The Company
was, therefore, renamed Exxon Chemical Pakistan Limited.
In 1991, Exxon decided to divest its fertilizer business on a global basis. The
employees of Exxon Chemical Pakistan Limited – in partnership with leading
international and local financial institutions – bought out Exxon’s 75% equity. This was,
and perhaps still is, the most successful employee buy-out in Pakistan’s corporate
history. Renamed Engro Chemicals Pakistan Limited, the Company went from strength
to strength with its consistent financial performance, growth of its core fertilizer
business, and diversification into other enterprises. A major plant capacity upgrade at
Daharki coincided with the employee led buyout in 1991. Engro also relocated fertilizer
manufacturing plants from the UK and US to its Daharki plant site – an international
first. Over the years that followed, Engro Chemicals Pakistan Limited started venturing
into other sectors namely: foods, energy, chemical storage and handling, trading,
industrial automation and petrochemicals.
By 2009, Engro was fast growing and had already diversified its business portfolio in
as many as seven different industries. The continuous expansions and diversifications
in the Company’s enterprises necessitated a broad restructuring in Engro Chemicals
Pakistan Limited, which subsequently demerged to form a new Engro subsidiary –
Engro Fertilizers Limited.
After the necessary legal procedures and approvals, the Sindh High Court sanctioned
the demerger on December 9, 2009. The demerger became effective from January 1,
2010. Subsequently, all fertilizer business assets and liabilities have been transferred
to Engro Fertilizers Limited against the issue of shares to the parent company Engro
Corporation Limited.
our footprint
Head Office
Daharki plant
Zarkhez plant
Zonal Sales Offices:

Central
Islamabad
South
North
Warehouse
Lahore
Pakistan
Karachi
S. No. Description Address
1 Head Office 7th & 8th Floor, Harbor Front Building, Marine Drive, Block 4, Clifton, Karachi
2 Daharki Plant Daharki, District Ghotki
3 Zarkhez Plant EZ/ 1 / P – 1 – II Eastern Zone, Port Qasim, Karachi
4 Sales Zone – South 6th Floor, State Life Building, Thandi Sarak, Hyderabad
5 Sales Zone – Central 3rd Floor, Mehr Fatima Tower, Opp. Highcourt, Old Bahawalpur Road, Multan
6 Sales Zone – North 19-A, 4th Floor, Ali Block, New Garden Town, Lahore
our milestones
1957 2010
Mari gas field discovered by Esso Mobil joint venture Demerger of Engro Chemicals Pakistan Limited and transfer of fertilizer business to a
separate company. Engro Fertilizers Limited. Engro Chemicals renamed Engro
Corporation Limited
1964
2011
Signed agreement with the government to set up a urea plant with an annual
capacity of 173,000 tons
Enven capitalized and started commercial production
1965
The Company was incorporated as Esso Pakistan Fertilizer Limited, to manufacture 2013
and market fertilizers Successful IPO conducted. Oversubscribed 3x during the process
1968 2014
Urea plant commissioned
Achieved highest ever Urea sales in the history of Engro Fertilizers of 1,818 KT
consequently resulting in highest ever market share of 32% for urea in 2014
1991
Exxon divests its equity from fertilizer business globally; the Company is renamed as 2015
Engro Chemicals Pakistan Limited through an employee led buyout
Highest ever production of UREA (1968 KT) as well as highest ever UREA sales
(1878 KT) Only fertilizer company registered with Dupont to achieve a Level 4 rating
1992 in Safety Management Systems Acquisition of Engro Eximp’s Phosphates bus
Relocation of world-scale ammonia and urea plants (PakVen 600) from USA and UK –
capacity enhancement 278 KT to 600 KT
2018
Highest ever consolidated revenue (PKR 109 billion)
1998 Highest ever fertilizer sales (2,834 KT)
EFert Marketing team is the only team in Pakistan to achieve a
Debottlenecking of relocated plants – capacity enhancement from 600 KT to 850 KT
Dupont Level 4 rating in Safety Systems
by 1998 and further enhancement to 950 KT by 2006
2007
Started construction of world’s largest single-train urea plant - enVen
calendar of
major events for 2018
Quarter 1
• EFERT won the Pakistan Advertisers Society (PAS)
award for its “Aam Aadmi Nahi” campaign in the category of
“Agriculture & Related Industries” in PAS AWARDS 2018
• Fatality at E-Pond occurred during January which was a

disappointment Quarter 3
• Exported 12 KT Urea which was allocated from new export quota
• Dupont auditors rated EFert Marketing Division as Dupont Level 4
• Started marketing 4 new products; Zoron, Power Potash, SSP+Zn and compliant on Safety Systems. EFert marketing team is the only team
in Pakistan to achieve level 4 rating
Zabardast Urea
• EPS of PKR 2.91 • EFERT relaunched its premium Phosphates brand Zorawar
• 2,500 trees planted along with railway lines near Gate-3, in Daharki • EFERT’s “One Million Tree” Project was initiated
• EPS of PKR 3.82
• DPS of PKR 4.0
Quarter 2
• Successful turnaround of Enven Plant Quarter 4
• PACRA upgraded EFERT Long Term rating from AA- to AA • Highest ever full year sales of Urea were achieved
• Successful launch of “ENGRO JASHAN-E-PACHAS” campaign • Highest ever full year profit was recorded
• EPS of PKR 2.44 • Highest ever full year DAP sales were achieved
• Dividend of PKR 4.0 per share announced • EPS of PKR 3.87
• DPS of PKR 3.0 announced
our core values
At Engro Fertilizers, we support our leadership culture through unique systems and
policies, which ensure open communication, foster an environment of employee and
partner privacy, and guarantee the well-being and safety of our employees.
Our core values form the basis of everything we do at Engro Fertilizers: from formal
decision making to how we conduct our business to spot awards and recognition.
At Engro Fertilizers, we never forget what we stand for.
Following are our core values:
Ethics & Integrity

We do care how results are achieved and will demonstrate
honest and ethical behavior in all our activities. Choosing
the course of highest integrity is our intent and we will
establish and maintain the highest professional and
personal standards. A well-founded reputation for
scrupulous dealing is itself a priceless asset.
Health, Safety & Environment

We will manage and utilize resources and operations in such a
way that the safety and health of our people, neighbors,
customers and visitors is ensured. We believe our safety,
health and environmental responsibilities extend beyond
protection and enhancement of our own facilities.
Innovation & Risk Taking

Success requires us to continually strive to produce breakthrough
ideas that result in improved solutions and services. We
encourage challenges to the status quo and seek organizational
environments in which ideas are generated, nurtured and
developed. Engro appreciates employees for well thought out
risks taken in all realms of business and for the results achieved
due to them, acknowledging the fact that not all risks will result in
success.
Our People
We strongly believe in the dignity and value of people. We
must consistently treat each other with respect and strive to
create an organizational environment in which individuals
are fairly treated, encouraged and empowered to
contribute, grow and develop themselves and help to
develop each other. We do not tolerate any form of
harassment or discrimination.
Community & Society

We believe that a successful business creates much bigger
economic impact and value in the community, which dwarfs
any philanthropic contribution. Hence, at Engro, sustainable
business development is to be anchored in commitment to
engage with key stakeholders in the community and society.
Ethics & Code of Conduct

Ethics and integrity are cardinal values of Engro Fertilizers. It refers to a commitment to moral
thought and action in all aspects of how a Company is managed. Not only is it about
complying with all laws but also describes the moral choices that often have to be made in
areas where the law is not clear.
The Company has prepared a “Code of Conduct” comprising of Ethics and Business Practices
policies and has ensured that appropriate steps have been taken to disseminate it throughout
the Company along with its supporting policies and procedures.
ownership structure and
relationship with group companies
Engro
Corporation
Engro Elengy Engro Engro Engro Engro Vopak Engro EngroEximp

Fertilizer Terminal Polymer Infiniti (100%) Energy (100%) Terminal (50%) Foods (39.9%) Agriproducts (100%)
(56.3%) Pakistan (80%) (56.2%)
EFert Agritrade Engro Elengy Engro

Engro Polymer
(Pvt) Ltd Terminal Digital (100%)
Trading (100%)
(100%) (Pvt) Ltd (100%)
Enfreshare
Engro Eximp FZE
(Private)
(100%)
Limited (100%)
Engro
Engro Energy Engro Power Engro Kolachi GEL Sindh
Powergen Siddiqsons
Services International Holding BV Powergen Portgen Utilities Engro Coal
Thar (Pvt) Ltd Energy (19%)
(100%) Netherlands (100%) Qadirpur (68.9%) (Pvt) Ltd (100%) Nigeria (45%) Mining Co (11.9%)
(50.1%)
Thar
Engro Power Engro Power Power (100%)
Services Holding Investments International
B.V. Netherlands (100%) B.V. Netherlands (100%)
Thar
Foundation (100%)
Engro Power Magboro Power
Services Ltd Company Limited
Nigeria (100%) Nigeria (3.3%)
EngroGen Energy
Services Ltd
Mauritius (50%) Subsidiaries
Associates / JV
board of directors
Left to Right
Sadia Khan, Abdul Samad Dawood, Nadir Salar Qureshi,
Hasnain Moochhala, Ghias Khan, Asim Murtaza Khan,
Asad Said Jafar, Javed Akbar
directors’ profiles
Abdul Samad Dawood

DIRECTOR
Ghias Khan
CHAIRMAN
Abdul Samad Dawood joined the Board of Engro Fertilizers in 2010. He is Vice Chairman of the Board of
Engro Corporation Limited, Chairman of the Board of Engro Foods Limited, and sits on the Boards of
Dawood Hercules Corporation Limited, Dawood Lawrencepur Limited, Engro Fertilizer Limited and Reon
(Private) Limited. He is also a Trustee on the Board of Dawood Foundation.
Ghias Khan is the President and Chief Executive Officer (CEO) of Engro Corporation Limited and the
Chairman of Engro Fertilizers. Before being appointed President and CEO, he held several roles across the
Abdul Samad Dawood has served as CEO of Cyan Limited and Dawood Hercules Corporation Limited. He
Dawood Hercules Group of Companies, most recently being the Executive Director of Dawood Hercules.
has also sat as Director on the Boards of International Industries Limited, ABL Asset Management Company,
Sui Northern Gas Pipeline Company, and World Wide Fund for Nature – Pakistan. He is also a member of the
Prior to Engro, Ghias remained the Chief Executive of Inbox Business Technologies for 15 years and, under
Young Presidents’ Organization.
his leadership, Inbox grew to 1,900 employees. He helped in pivoting Inbox from a computer manufacturer
to a systems integrator, and then to a technology-enabled digital services company. In his final year at Inbox,
Abdul Samad Dawood is a graduate in Economics from University College London, UK.
it was voted the largest technology company in Pakistan by Domestic Spend. He also served as Chairman of
the Board of Elixir Securities for over 3 years.
At Engro, Ghias has played a critical role in developing a ‘digital first’ vision and a strategic plan to guide the
entire group of companies.
Asad Said Jafar

Ghias holds an MBA from the Institute of Business Administration in Karachi.
DIRECTOR
Nadir Salar Qureshi Asad Said Jafar, who is presently the Chairman & CEO of Philips Pakistan, a role he was appointed to in
2009, has been a part of the company for over twenty years. Over the course of his professional career at
CHIEF EXECUTIVE OFFICER Philips, Asad has held senior leadership positions across the Philips world, in Pakistan, Indonesia, Thailand
and Singapore.
Asad is responsible for managing the company, formulating, executing long-term strategies, and ensuring
emergence of the company as a robust market leading solutions provider. He brought to the forefront, the
Nadir Salar Qureshi is the Chief Executive Officer of Engro Fertilizers since December 2018. He joined Engro company’s global mission of creating meaningful innovations for people which served as a driver of success
Corporation Limited in March 2017 as Chief Strategy Officer. He completed his MBA from Harvard Business in business.
School, and his Bachelors and Masters degrees in Nuclear Engineering from MIT. He brings with him
expertise in multiple sectors across GCC, Turkey, Australia, India, ASEAN and EU. He is also experienced in A veteran business professional, Asad was serving as Director, Supply Chain Management (SCM) for the
consulting, private equity and finance. ASEAN region for Philips before he took on the role of CEO for Philips Pakistan. As the Supply Chain
Director, he implemented various modern SCM strategies that streamlined cumbersome business
Nadir began his career with Engro Chemical Pakistan Limited as a Business Analyst and then moved on to processes. He was responsible for the setting up of the ASEAN Luminaries Supply Group in Bangkok,
organizations such as Hub Power Company, Bain & Company, Carrier Corporation and Abraaj Capital, Thailand which propelled a massive turnaround in the business. During his expatriate postings, he was also
leading up to his most recent role as Chief Investment Officer at Makara Capital in Singapore. Nadir is a the Head of SCM at Philips Indonesia.
Director on the Boards of Engro Fertilizers Limited, Engro Powergen Limited, Engro Polymer Limited and
Engro Vopak Terminal Limited.
In addition to his responsibility as the Country Leader for Philips Pakistan, Asad is associated with various
prestigious external organizations. He was the president of Overseas Investors Chamber of Commerce and
Industry (OICCI) for the year 2014. He serves on the Board of Directors of Engro Fertilizer. He formerly also
served on the Board of Directors of Pakistan Institute of Corporate Governance (PICG) and Engro Polymer &
Chemicals Limited. He is a member of the Institute of Business Administration (IBA) Corporate Leaders
Advisory Board (ICLAB), a member of NED University’s International Advisory Board and also mentors MBA
students as part of the Karachi School of Business & Leadership (KSBL) CEO Mentorship program.
Asad’s career began as a Management Trainee at ICI Pakistan Limited in 1988. His eight years at ICI
Javed Akbar
allowed him to work in diverse engineering, manufacturing, project management and planning related roles. DIRECTOR
He holds a bachelor’s degree in Electrical Engineering from NED University, Karachi and an MBA degree
from Imperial College Business School, London, UK where he studied as a Chevening scholar.
Asad continues to consider learning a priority and has completed many management development
programs including the ‘Leading a Business’ program of Ashrides Business School, UK. He attended the Javed Akbar is a Chemical Engineer and has over 40 years of experience in fertilizer and chemical business
‘Philips Simplicity Brand 1000’ program at Chicago Graduates School of Business as well as a Business with Exxon, Engro and Vopak in Pakistan and overseas. He was part of the buyout team in 1991 when Exxon
Marketing Strategy program at Kellogg School of Management, Northwestern University, USA. He is often divested its stake in Engro.
invited to address business professionals and student audiences at corporate and academic events.
Prior to his retirement in 2006, he was Chief Executive of Engro Vopak Terminal Limited, a joint venture
between Engro and Royal Vopak of Holland. After retirement, he established a consulting company
specializing in analyzing and forecasting petroleum, petrochemical and energy industry trends and
providing strategic insight.
He currently serves on the Board of companies involved in fertilizer, petroleum, power and renewable
energy.
Asim Murtaza Khan

DIRECTOR
Asim Murtaza Khan is working as CEO (Hon) with the Petroleum Institute of Pakistan (PIP) since November
2015. Prior to that he worked for Pakistan Petroleum Limited (PPL) for over 32 years after joining the
Company as a Production Engineer and served on key senior positions. He was also responsible for Bolan Hasnain Moochhala
Mining Enterprises, a 50:50 joint venture of PPL and the Government of Balochistan for mining of barites, iron DIRECTOR
ore and lead-zinc; and was one of the founder Directors of PPL’s overseas subsidiary companies, PPL
Europe E&P Ltd. and PPL Asia E&P B.V.
Mr. Khan was appointed MD/CEO of PPL by the Government of Pakistan on May 12, 2011. After completing
the contract term as MD/CEO, he served PPL as Executive Director until superannuation in February 2015. Hasnain Moochhala joined the board of Engro Fertilizers Limited in 2019. He joined Engro Corporation
Limited as Chief Financial Officer in June 2017. Prior to that he has had a career in Commercial Finance,
He earned his Bachelor’s in Mechanical Engineering from NED University of Engineering and Technology, M&A, Corporate Governance, Treasury and Audit over 30 years across Europe and Asia. The last 20 years of
Karachi followed by a Masters in Mechanical Engineering from the University of Manchester Institute of his career was with Royal Dutch Shell in various roles including Finance Director Shell Pakistan, Head of
Science and Technology, UK. He is an alumnus of the Kellogg School of Management, Northwestern Finance for Shell Lubricants Asia Pac, Head of Downstream M&A East and Finance Manager Upstream Joint
University, USA and has also attended several advanced technical and management training programs. Ventures.
He is the Chair of the Petroleum Advisory Board, NED University of Engineering & Technology and is a Hasnain has partnered with businesses of significant size across China, South and East Asia, delivering
Central Council member of the Institution of Engineers Pakistan. He also serves on the Boards of Pakistan turnaround business performance whilst ensuring robust business controls and compliance in matrixed
LNG Terminals Limited and Agritech Limited. In the past he has been the Chairman on the Board of organizations. His key achievements in prior roles include the delivery of material M&A transactions, the
Petroleum Institute of Pakistan (PIP), Member of the Management Committee, Overseas Investment Chamber formulation of global best practice in Joint Venture Governance, cost leadership and the building of strategic
of Commerce and Industries (OICCI) and a Member of the Executive Committee, Vice Chairman and the partnerships with various stakeholders. Hasnain has also led, coached and mentored teams in Singapore
Chair of the Technical and Operations Committee of the Pakistan Petroleum Exploration and Production and Pakistan, as well as virtual teams across Asia Pacific and Europe.
Companies Association (PPEPCA). He has also served on the Boards of Pakistan Institute of Corporate
Governance (PICG), the Community Development Board of the Government of Sindh.
Sadia Khan
DIRECTOR
Sadia Khan has pursued a versatile career path traversing investment banking, financial regulation, family
businesses and entrepreneurship across three continents. With Masters degrees in Economics from both
Cambridge University and Yale University, Sadia started her career at Lehman Brothers in New York. Since
then she has worked with various international institutions and local regulatory authorities, including the Asian
Development Bank in the Philippines, the Securities & Exchange Commission of Pakistan and the State Bank
of Pakistan. She is currently the CEO of Selar Enterprises, a company she founded in 2011 while working as
Group Executive Director in her family owned business, Delta Shipping. For the past two decades, Sadia has
remained a passionate advocate of corporate governance and currently serves on various boards as an
independent director, including Pakistan Cables, Engro Fertilizer, Karandaaz, Habib Bank, Siemens and
INSEAD. Her book entitled “Corporate Governance Landscape of Pakistan” was published by Oxford
University Press in 2017.
In 2014, the French Government conferred on her, the prestigious French award, "Chevalier de l'Ordre
National du Mérite" (Knight of the National Order of Merit). Sadia is the President of the global INSEAD
Alumni Association since 2015. She also serves as the Honorary Consul General of Finland in Karachi.
management team
Left to Right
Amir Iqbal, Muhammad Majid Latif, Muhammad Azhar Malik,
Nadir Salar Qureshi, Syed Shahzad Nabi, Fahd Khawaja,
Mohsin Ali Mangi, Imran Ahmed
organisational structure
CEO
C o mm e rcia l Pro cure m e nt Agr ibusin e s s C or p orate Huma n M a nu factur ing

D i v isi o n a nd M ate r ia l So lu ti o ns Audi t * Re sourc e s D i v isi o n Fina nc e & Ac c ounting
Ma nag e me nt (P& MM)
HSE a nd Z a r k h ez Administ Fina nc e &

Sa l e s P& MM Te c hni c a l O p e rati o ns M e di c a l
Tra ining Pl a nt rati o n Pl a nning
Administrati o n
D istr ibu ti o n General Accounting
Pro c e s s Pro du cti o n

HSE
Sp e ci a l t y
Fe r tilize r
Busin e s s M e c ha ni c a l
M a inte na nc e
Crop Sci e nc e
Instr um e nt a nd
El e ctr i c a l
Phosphates
International
Trade
* Administrative reporting
our brands
our winning formula
At Engro Fertilizers, when we talk about our undying commitment to deliver the highest standards of quality,
our focus goes well beyond how our brands will fare amongst our target audience to how they will impact
customer lives by enriching their soils and crops to maximize yield. This is precisely why we strive to combine
innovation and quality with customer needs and expectations. Engro DAP
For healthy growth, the plant requires three major nutrients
namely Nitrogen, Phosphorus and Potassium. Di-Ammonium
Phosphate (DAP), which contains 46% Phosphorus, is the most
widely used source of Phosphorus for the plant. DAP strengthens
the roots of the plant and improves nutrient uptake. DAP was
imported in Pakistan by the fertilizer import department until 1994
and since then the private sector has been responsible for all
imports.
Engro Fertilizers has been importing and marketing DAP in the

Country since 1996. Engro Fertilizers is the most trusted and one
of the largest importers of DAP in the Country. Engro DAP is a
product that maintains a high-quality standard and is monitored
Engro Urea through stringent quality checks. Engro DAP has high water
Engro is the first Company to have established a Urea production solubility and characteristic pH which ensures optimal soil
facility in Pakistan, a landmark event in agricultural sector of the distribution. Engro DAP is marketed in 50 kg bags.
Country. This together with the fact that urea is the most widely
used fertilizer in the Country, gives Engro Urea a special standing
in the domestic fertilizer market. Engro Fertilizers Limited started
annual production of 173,000 tons in 1968. Through various
debottlenecking and expansion steps, the capacity has been
increased to 975,000 tons per year.
In 2011, the Company setup world’s largest single train urea plant
of 1,300,000 ton capacity.
Urea is the most important and widely utilized Nitrogen fertilizer in

the world. It contains 46% nitrogen and is readily soluble in water.
It is the most concentrated solid Nitrogen fertilizer that is
produced in prilled and granule and form; Engro Fertilizers
produces prilled Urea. Urea is used for basil and foliar
application, as an ingredient of liquid fertilizers as well as in Zorawar
NP/ NPK complexes. Zorawar is high-value Phosphatic Fertilizer which has 10%
Nitrogen (N) and 50% Phosphorus (P2O5). It is low pH Fertilizer
with better availability of nutrients. It is more soluble as
compared to other Phosphatic Fertilizers. Zorawar improves
seed germination, strengthens root development, improves
tillering in wheat, rice, sugarcane, improves grains health in
cereals and better grain weight, trigger more flowers and better
fruiting in cotton, vegetables and fruit trees and help timely
ripening of crop. Engro Zorawar is available in 50 kg bags.
Zingro
Engro NP Zinc is a micronutrient, which the crop requires in small dosages
and it compliments functions of major nutrients. Over the years,
NP formulations that contain Nitrogen and Phosphorus in almost
zinc deficiency has been well established on a variety of crops
equal quantity have been especially important to Pakistani
and in rice specifically. Zingro brings to the market the trust of
farmers, given the peculiar deficiency of both components in
Engro and high-quality standard which has made it distinct from
most of the Pakistani soils. This category serves the needs of a
all the competition. It is the market leader in a highly fragmented
particular niche of farming community in the Country; where
industry. Zingro acts as a tonic and gives quick response and a
application of Nitrogen and Phosphorus is required in almost
better yield. Zingro contains 33% Granular Zinc Sulphate Mono-
equal proportions. Due to higher ‘N’ content a few farmers also
hydrate and is 99.99% water soluble.
use E-NP for top dressing during crop growth stage. Engro
started producing NP in 2005 and has been extensively
marketing the product whilst especially enjoying a high market Zingro has evolved to become the leading brand in the micronu-
share in lower Sindh. Engro NP is available in 50 kg bags. It is trient category and is accredited to converting the image of the
available in 3 different grades: 22:20 and 20:20 (imported) for category to a highly acceptable one. Zingro has won the presti-
lower Sindh region whereas 18:18 for rest of the country. gious “Brand of the Year” award for 2009 in the micronutrient
category.
Engro Zarkhez
Plants require three major nutrients (i.e. Nitrogen, Phosphorus and
Potassium) for quality & higher yield. Zarkhez, introduced in 2002, is
the only branded fertilizer in Pakistan which contains all three nutrients.
Presence of all the macro nutrients results in synergistic plant nutrient
uptake. The resultant yield is of high quality; sucrose content of sugar
cane increases, quality and size of potato improves, and fruit and
vegetables appear and taste better. Zarkhez is a high quality fertilizer
containing correct proportions of the three nutrients in each of its
granule thus making the fertilizer application very convenient for the Engro MOP
farmer. In addition to convenience, it also helps ensure uniform and In addition to potash based blended fertilizer NPK, Potassium
balanced nutrient application. can also be applied in form of straight fertilizer, out of which one
widely used kind of Potassium-based fertilizer is MOP or Muriate
Zarkhez is currently available in three different grades of 50 kg bags of Potash. We have launched Engro MOP in 50 kg SKU targeting
with nutrient proportions suitable for sugarcane, vegetables, potato, all potash loving crops such as potato, maize, sugarcane, wheat,
fruit orchards and tobacco. The grades are popular among progressive rice, cotton, vegetables, fruits, orchards and tobacco. MOP
farmers due to its convenience, high crush strength, and appropriate contains 60% Potassium nutrient and is the most concentrated
granule size and free flowing nature. form of granular Potassium. It is also relatively price competitive
compared to other forms of Potassium available in the market.
• Zarkhez Green Plus (NPK 8-23-18) available in 50 kg bag is The chloride content of MOP is helpful for a soil where chloride
consumed on vegetables and other cash crops. level is low. Chloride content also improves the yield of produce
• Zarkhez Blue (NPK 17-17-17) and Zarkhez Brown (NPK 15-15-15) as it increases disease resistance in crops by promoting
are available in 50 kg bag is consumed on fruits and orchards. thickness of the outer cell walls. It also improves color, flavor,
• Zarkhez Tobacco (NPK 12-12-18) available in 50 kg bag used for and storing quality of fruit and vegetables.
tobacco crop.
Engro Ammonium Sulphate
Engro SOP Ammonium Sulphate is used primarily where there is a need for
Potassium is also applied as a straight fertilizer in the form of supplemental N and S to meet the nutritional requirement of
SOP or Sulphate of Potash. SOP is low chloride form of growing plants, 21% Nitrogen and 24% Sulphate. There is a
Potassium. Engro SOP is launched in 50 kg SKU in both granular growing realization in farmers that Sulphur is an important
and powder forms, targeting all potash loving crops such as Macro-Nutrient, hence is used by farmers as a source of Sulphur.
potato, maize, sugarcane, wheat, rice, cotton, vegetables, fruits, It helps increase resistance power in plant against diseases,
orchards, and tobacco. SOP contains 50% Potassium nutrient especially against fungus attacks and helps in transportation of
and 17.5% Sulphur. SOP is considered as a premium-quality nutrients in plants. In this form Ammonia (Ammonium Sulphate) is
Potash. Using SOP not only improves quality and crop yields, but released slowly, compared to Urea (Ammonium Nitrate) Nitrogen
also makes plants more resilient to drought, frost, insects and uptake of plants is better. After application crops look lush green,
even diseases. better compared to Urea application.
Engro SSP
Its full form is Single Super Phosphate with nutrient value of 18% (P2O5) with
added benefit of gypsum (CaSO4). Engro SSP is produced through Zabardast Urea
Imported Rock Phosphate. Our strategy is to leverage Engro brand image Zabardast Urea (ZU) is yet another leap forward by Engro
and provide the farmers with an extremely good quality product, which is not Fertilizers in pioneering next generation fertilizer's introduction in
available in the market at the moment. Pakistan. The product is developed in collaboration with Niha
Corp USA and launched in 2017. It has unique combination of
Over the years, SSP has been faced with severe negative consequences Nitrogen (42%), Bioactive Zinc (1%) and consortium of beneficial
due to a lack of product quality, with spurious manufacturers present microbes. ZU marveled efficiency of Nitrogen and Bioactive Zinc
throughout the market, while there is an established market for this category. with synergetic advantages of microbial support to mobilize
Engro is fulfilling the need for a quality player in the market for SSP which nutrients in soil and enhance crop resistance. ZU expressed
can uplift the farmer confidence. great potential in all crops by saving separate zinc use cost,
increasing yield, improving quality, enriching zinc contents in
The target market for the product is price sensitive, low-medium income produce and enhancing farmers' profitability.
farmers with small-medium land holdings and also normal SSP users across
Pakistan. The product is targeted on all crops.
crops sciences division
Zoron
nutrient segment
Zoron is a micronutrient brand which encompasses 20% water
soluble boron contents. It increases efficacy of other fertilizers,
nourishes the plant, increases yield, reduces boll’s deformation,
reduces shedding of flower and fruits and enhances quality of
Librel Zn
Indication : Chelated Zinc
the product. Zoron can be used as basil application and foliar
SKU : 500 grams
application. Zoron is recommended for cotton, cereals (rice,
Crop : Multiple
maize, oat), vegetables (onion, potato, tomato, cauliflower), fruits
(apple, banana, grapes, guava, apricot, pear, peach, plum),
Librel Zinc is the quality Chelated Zinc, researched, developed
rose and other ornamental plants.
and produced by BASF. Product formulation is designed to
ensure maximum Zinc offtake in plants. It’s water solubility gives
the flexibility to be used as foliar, through fertigation or
broadcasting. Liberal Zinc is suitable for all zinc deficient soils
and can be used in sugarcane, cotton, maize, wheat, orchards,
vegetable and rice.
Azidox 32.5 SC
Indication: Fungicides
SKU : 200 ml
Crop : Rice, Vegetable & Fruit Orchards
Potash Power Azidox is a two-way mixture of fungicides registered against
Potash Potash is very high value and ideal source of N and K fertilizer sheath blight in rice and anthraconze & powdery mildew in
containing 13% nitrogen (N) and 44% potassium (K2O). It is low pH vegetables. It is protective, curative and eradicative in action.
fertilizer which makes availability of other nutrients to the soil and is
100% water soluble fertilizer. It is very much suitable for basil and
foliar application with high efficiency irrigation system (Sprinkler &
Pivot). Potash Power helps to build thick cell walls, increases
concentration of electrolytes inside the cell to acquire frost resistance.
It increases fruit size, fruit appearance, organoleptic features and
shelf life. Potash Power outperforms other potassium fertilizers for
crops such as cotton, wheat, rice, sugarcane, sunflower ,maize,
flower, and fruits at mid to late stage application for improving health,
yield, optimal plant nutrition and quality of crop. Sulphur 80% WG
Indication: Fungicides
SKU : 1 Kg
Crop : Multiple Crops
Sulphur is considered as 4th essential nutrient after three macro
nutrient elements of NPK. Moreover, it is a very effective and safe
fungicide against leaf spots in rice and powdery mildew in
mango & cucurbits. It possesses very good solubility and
absorption properties. Its good stickiness ensures proper
coverage and resists rain fastness. It can be applied through
foliar or through soil application.
Truce Xtra 88.8% WG
Indication: Herbicides
SKU : 400 grams
Crop : Maize, Sugarcane
Truce Xtra is one of the premium selective, post emergence
herbicides for sugarcane and maize marketed by Engro. It is a
pre-mix of two herbicides and premium 88% concentration
product. It is a broad-spectrum herbicide and controls broad
leaves, narrow leaves and sedges. It has excellent crop safety.
MAI TU
SKU: 300 ml
Crop: Wheat
Mai Tu is a strong combination of two selective, post emergence
systemic herbicide for grass weeds, particularly for phalaris
minor control in Wheat.
Umbra
SKU: 24 gram
Crop: Wheat
Umbra is a combination of two strong board leaf weeds in
wheat crop.
significant factors affecting strategic objectives
the external environment Strategic Objectives Strategic Actions Measurable KPI Relevance
Enhance farmer Increase interaction at Improve local Will continue to

productivity farmer level to pilot agriculture yield per be relevant in the
Economic
various initiatives of acre by guiding foreseeable
improving farmer farmers to adopt best future
• Pressure on FX can lead to productivity practices
shrinking margins on traded products
and lower margins on Dollar-linked gas
prices Liaison with relevant
stakeholders to optimize
• Rising interest rates inflate cost of
Political borrowing for the Company, also Social cost of inputs
aggravating costs for farmers
operating on credit Optimize on Make efficient use of Increase the Will continue to
• Possibility of policy makeover • Population projected to exceed manufacturing available gas to improve percentage capacity be relevant in the
brought in by regulatory authorities with 300 million by 2050 requiring growth in
respect to agriculture policies, which can agri production excellence capacity utilization of utilization of Plant 1 foreseeable
have an impact on the Company’s pricing and manufacturing facility future
cost structure • Lack of structured agri-value chain and lower
productivity of farmer compare to regional
• Possibility of major gas projects going peers Leverage brand name Use Engro’s strong Enhance market share Will continue to
through (e.g. TAPI) will increase to increase top-line brand name to improve especially for be relevant in the
• The company has been working on
availability of company’s primary
various fronts to facilitate agri presence across all Phosphates and foreseeable
raw material. This can allow
company to improve its financing and improvements in regions in the Country Potassium variants future
the yields for the farmers
PESTEL
production portfolio
Become the farmer’s Enter new areas within Enhance position in the Will continue to
preferred partner by the Agri-value chain to Agri-space by offering be relevant in the
Technological offering complete offer farmers end-to-end increased numbers of foreseeable
Legal
Agri-solutions solutions products and solutions future
• Farmers are not making use of Achieving Operational Bringing efficiency in Reduction in costs Will continue to
• GIDC is currently being levied on technological advancements to improve
industrial gas users; this aggravates cost yields. Our agri yields are one of the lowest efficiency line with global through operational be relevant in the
of doing business. Levy of GIDC would
adversely impact the farmer input cost.
in the region standards efficiencies foreseeable
Currently the industry is absorbing major impact • The company has been working on various future
of this levy and is contesting this levy in the fronts to bring technological
interest of all stakeholders Environmental improvements in the Agri landscape of Providing Agri-inputs at Facilitate the local Maintain price delta of Will continue to
the Country
optimal prices farmers by providing locally manufactured be relevant in the
• Pakistan is endangered to reach inputs at cheaper prices products by Engro foreseeable
absolute water scarcity if problem is not Fertilizers with future
properly addressed. This could hinder
efficient fertilizer usage for farming purposes.
international prices
Corporate social Focusing on improving Number of lives On going

responsibility quality of life of people impacted
residing in Daharki
Indicators and Performance measures

The Company has a separate mechanism for all its products, to design relevant and tangible performance
indicators which would remain relevant for the foreseeable future. The indicators are designed keeping in mind
the Company’s forecasts on indicative industry dynamics, as well as the macro factors which could impact its
profitability. The performance measures are long term in nature and remain unchanged compared to last year.
resource allocation plans
The Company aims to achieve its long-term goals by optimizing available resources. This would be The Company invests any additional funds at the most competitive rates, which, in turn, adds to its
done by primarily leveraging on its strong brand equity with efficient utilization of the Company’s core investment income and dually provides the Company with additional funds to meet its operational
strengths which includes but is not limited to: needs.
1) Financial strength The Company has been able to successfully maintain its long-term and short-term credit rating of AA
and A1 respectively through its prompt, coherent and effective methods of managing its business,
2) Competent human resource investments, cash and liabilities (long-term and short-term).
3) Manufacturing excellence Treasury Management
4) Strong HSE standards The Company operates its Treasury Management System with a focus to enhance profitability,
increase shareholder return and preserve invested capital. The Company endeavors to maintain a
Engro Fertilizers aims to become the preferred partner of farmers by providing an array of solutions. diversified portfolio of investment by placing funds in government securities/money market, TDRs
This will be through achievement of the smart strategic objectives which are easily measurable and and other investment schemes.
will remain relevant in the foreseeable future. Engro Fertilizers will continue to deploy its resources to
ensure efficient utilization of local resources and to eliminate dependence on imported fertilizers. Key objectives of the Treasury Management System are as follow:
The Company will continue to monitor the strategic objectives on an annual basis and will make • Based on cashflow projections, surplus funds are identified for investment by matching
amendments if needed based on changes in the internal and external environment. The Company is maturity dates of investments with working capital/ other funding requirements of the Company,
exploring various initiatives to achieve its long term ambitions and has undertaken a comprehensive to ensure sufficient liquidity to meet operational needs of the Company
sales restructuring program which will enable the Company to strengthen its reach within the country.
• Such investments are placed in short term securities to ensure optimal returns with highly
Significant Plans and Decisions credible institutions to curtail credit risk
With the Company having achieved significant success in the Fertilizer arena, the company took a • Investment portfolio is adequately diversified to earn maximum returns while maintaining
step in expanding its portfolio in the agriculture industry by venturing in the Seeds and Pesticides prudent level of risk and exposure
business. Engro Fertilizers plans to escalate the business going forward by enriching its portfolio with
increased focus on products which could better assist in enhancing farmer productivity and Financing Arrangements
profitability.
The Company places great emphasis on value maximization, which in turn leads to higher
During the year, the Company also undertook several capital expenditures to allow for gas shareholder returns. The Company does this by minimizing its financing cost and maximizing its
enrichment, this will ensure a more efficient use of its allocated share of gas. financial income. Working capital requirements are met through internal cash generation and
short-term borrowing whereas long-term borrowing is availed to meet capex requirements (if
Changes in Objectives and Strategies required) and to ensure balance sheet optimization. External financing includes both local and
foreign financing which is obtained after exhaustive evaluations of offers in hand and market
Whereas, the Company’s long-term strategies and objectives have stayed intact compared to last conditions, ensuring maximization of shareholder value.
year, Engro Fertilizers is continuously exploring opportunities to expand its footprint within the
agriculture industry. The company has already undertaken several initiatives at the farmer level and The Company’s strong financial position and credibility allowed it to avail foreign currency financing
aims at establishing itself as a one-stop solution for all farmer needs. of USD 15 million (in addition to other local long-term financing) during the year to meet CAPEX
requirements.
Liquidity and Working Capital Management
The Company recognizes it’s responsibility for timely repayment of outstanding loans. No default on
Improved market dynamics resulting in higher cash collection increased the Company’s working repayment of loans was made during the year.
capital position (PKR 1.35 billion in 2017 to PKR 5.76 billion in 2018). In order to manage its working
capital in the most efficient manner, the Company has a proactive Treasury Management System in
place. Cash generation realized through sales and borrowings from banks are used to meet the
liquidity requirements of the Company. Further, effective controls on credit sales and securing
advance payment against sales assist in managing its liquidity position.
risks and opportunities Operational Risk Operational risk refers to the risk of loss resulting from
inadequate or failed internal processes, people and systems or
from external events.
Risks are inherent in the businesses and can relate to strategic threats, operational issues,
compliance with laws, and reporting obligations. In order to deliver value to all stakeholders, it is Financial Risk Financial risk is an umbrella term for multiple types of risk
important that the Company understands and manages the risks faced across the entire associated with financing, profitability, liquidity and credit. The
organization. Company's overall risk management program focuses on
having cost efficient funding as well as to manage financial risk
RISK GOVERNANCE to minimize earnings volatility and provide maximum return to
shareholders. The Company’s policy for management of
The Board of Directors are responsible for ensuring that the Company has a robust process in place financial risks is explained in notes to the financial statements
for assessment of principal risks facing the company, including those that would threaten the for the year ended December 31, 2018.
business model, future performance, solvency or liquidity. The Board Audit Committee is responsible
to oversee implementation of the Enterprise Risk Management methodology approved by the Board. Financial Risk includes Credit Risk, Market Risk and Liquidity
In addition, the Board Compensation Committee focuses on risks relating to Human Capital including Risk.
assessment of compensation programs and succession planning.
Further, various management committees have been constituted which perform regular oversight of C. Risk Assessment
performance of the Company with respect to Organization & Employee Development, Health Safety
& Environment, Execution of Planned Capital Projects, Business Continuity Planning and Business The process involves consideration of the causes and sources of risk, the probability that the risk
Process Reengineering. event will occur, their positive or negative consequences and magnitude, and the likelihood that
those consequences may occur. The Board has approved formal criterion for assessment of the
The Company has a dedicated Internal Audit function which provides independent and objective ‘likelihood’ and ‘impact’ which is used by the management for risk assessment. Each risk is assigned
evaluations while reporting directly to the Audit Committee on the effectiveness of governance, risk a rating and recorded in the Risk Register. Risk assessment provides the basis for evaluation and
management and control processes. decisions regarding risk response or treatment.
ENTERPRISE RISK MANAGEMENT PROCESS D. Prioritization of Risk
Enterprise Risk Management (ERM) methodology implemented at the Company provides a The purpose of this step is to develop a prioritized list of enterprise-level risks for response options.
structured, disciplined and consistent approach to risk management that facilitates risk-informed By ranking and prioritizing the enterprise-level risks, the Company’s leadership can respond as
decision-making throughout the organization. The Framework implemented at the Company is appropriate with strategic allocation of resources while responding to the risks. The risks are ranked
illustrated below: according to Impact X Likelihood rating.
A. Formulation of Strategy and Business Objectives E. Implements Risk Responses
The focus of ERM at the Company is to ensure achievement of the organization objectives. Defining The purpose of this step is to select a combination of risk response options that will optimize the
the Organization’s strategy and objectives is pre-requisite to identifying risks and opportunities. Company’s resources in managing its portfolio of risks. The process involves identifying and
During this step, the management defines strategy and objectives for different areas of the assessing the range of risk response options and preparing implementation plans for selected
organization which are then approved by the Board of Directors. response options. Using a prioritized list of quantified risks requiring response options, the
leadership makes informed strategic decisions about how to allocate resources to risks reflected in
B. Identification of Risks and Opportunities the Enterprise Risk Register.
The purpose of this step is to identify a comprehensive list of risks and events that may potentially The following table lists down different risk response strategies that are considered:
impact the achievement of organization’s mission and strategic objectives. In order to identify
enterprise-level risks to be managed, a structured and systematic “Enterprise Risk Register” is used. Strategy Description
Broad types of risk which are used for categorization of risk and opportunities are as follows:
Accept Risk • Retain risk at its present level, taking no further action.
Risk Type Description
Strategic Risk Strategic risks are risks that affect or are created by an Avoid Risk • Discontinue operations or activities in a particular area.
organization's business strategy and strategic objectives. • Prohibit unacceptably high-risk activities and asset
exposures through appropriate policies.
Commercial Risk Commercial risks refer to potential losses arising from the
trading partners or the market in which the Company operates.
KEY RISKS AND MITIGATION PLAN (CONTINUED)
• Stop specific activities by redefining objectives, refocusing Risk Assessment

Risk Mitigation Strategies
strategic plans and policies, or redirecting resources. Likelihood Impact
• Screen alternative projects and budgeted investments to Strategic Risks
avoid off-strategy and unacceptably high-risk initiatives.
Continuous changes in Medium Medium • The Company’s management is actively
• Eliminate at the source by designing and implementing monitoring changes occurring in the
government policies and
internal preventive processes. regulatory framework.
regulations affecting
Company’s
Reduce Risk • Disperse financial, physical, or information assets to reduce competitiveness • Closely work and support the Government
risk of unacceptable catastrophic losses. in its vision to support and grow the
• Control risk through internal processes or actions that Source of Risk: External agriculture sector of the country.
reduce the likelihood of undesirable events occurring to an
acceptable level.
• Respond to well-defined contingencies by documenting an Decline in international Low Medium • Outflow of forex is required to finance
effective plan and empowering appropriate personnel to Urea prices allowing for imports.
make decisions; periodically test and, if necessary, execute imports impacting • Continue to invest in manufacturing
the plan. Company’s market share excellence to increase efficiencies.
• Diminish the magnitude of the activity that drives the risk. • The Company is currently selling urea at
Source of Risk: External prices mush lower than the imported urea
• Isolate differentiating characteristics of proprietary assets to
reduce risk of loss through imitation, obsolescence, or other by approximately PKR 700 per bag.
competitive pressures.
• Test strategies and implemented measures on a limited Downturn in domestic Low Medium • The Company actively monitors the factors
basis to evaluate results under distressed conditions. demand for Urea sales affecting demand for Urea and optimizes
• Improve capabilities to manage a desired exposure. its production and marketing strategies.
Source of Risk: External • The Company will continue to invest in
• Relocate operations in order to transfer risk from one
location, in which it cannot be well managed, to another brand development, market development
location in which it can. and long-term customer relationships.
• Redesign the approach to managing the risk. • Subject to regulatory approvals, the
• Diversify organizational assets that entity currently Company also has the option to export
implements for business operations. surplus quantity.
Commercial Risks
Share Risk • Outsource non-core processes (a viable risk transfer option
only when risk is contractually transferred). Oversupply in local Urea Medium High • The Company enjoys a strong brand and
• Delegate risk by entering into arrangements with market leading to price loyal customer base and currently holds
independent, capable authorities. competition and decline 34% market share of local Urea Sales. The
in market share Company will continue to invest in brand
F. Monitoring and Reporting development and long-term customer
Source of Risk: External relationships.
The ERM Risk Register is reviewed on periodic basis to ensure updation for changes in external and Inability of the Company Medium High • The Company is committed towards
internal environment. The ERM Risk Register, Risk Heat Maps and mitigation strategies are also to pass through increase operational efficiencies and
presented to the Management Committee and the Board Audit Committee on bi-annual basis. in production and implementation of effective cost controls.
distribution costs • The Company is actively looking into
KEY RISKS AND MITIGATION PLAN affecting profitability alternate sources of energy to reduce
cost.
Following are the major risks effecting availability, quality and affordability of Capitals in the short, Source of Risk: Internal
medium and long term, which may affect our business operations along with the management
Rising prices of ‘P’ and Medium Low • The Company plans on working with the
assessment of their source, likelihood, impact and the mitigating strategies implemented by the
‘K’ variants could restrict Government to introduce subsidy plans to
Company for these risks:
market for the said and encourage farmer to invest in ‘P’, ‘K’ and
thus impact profitability other value added variants
of the company’s
Phosphates and
Specialty Businesses
Source of Risk: External
KEY RISKS AND MITIGATION PLAN (CONTINUED) KEY RISKS AND MITIGATION PLAN (CONTINUED)
Risk Assessment Risk Assessment
Risk Mitigation Strategies Risk Mitigation Strategies
Likelihood Impact Likelihood Impact
Higher reliance of Medium Low • Company will continue to engage with the Reduced gas pressure Medium High • Capital Investment in compression
farmers on Urea and farmer at the ground level and stress on affecting ability of the facilities made in 2018 which will sustain
resistance on making the benefits of making a balanced use of plant to run at full pressure for the next two years.
balanced nutrient usage. fertilizers. capacity • Continue to make investments in
This will hurt market for Source of Risk: External Compression facilities.
‘P’ and ‘K’ variants
Plant shutdown due to Medium High • Preventive maintenance plan in place with
equipment failure specific measures for monitoring and
Financial Risks maintenance of Plant vulnerabilities.
Source of Risk: Internal • The Company has planned CAPEX to
Non-availability of cash Low Medium • The Company has a pro-active treasury
function which ensures that adequate enhance reliability of its plants
to allow for investment in • Inventory of Critical Plant components
working capital, settle funds and credit lines are kept available
for any unforeseen situation. maintained to ensure timely replacement
liabilities or finance in case of failure.
capital investments • Business Interruption insurance coverage
Source of Risk: Internal obtained.
Defaults by Customer in Low Low • Majority of the sales are either against Strategic Risks
settlement of their advance cash, hence are not exposed
obligations towards the to credit risk. Attrition of critical Low Medium • The Company has formal succession
Company • For credit sales, majority of the credit personnel hindering the planning process which is stewarded
sales are secured against Bank operations of the by the Management Committee and the
Source of Risk: External guarantees by minimum A+ rated Company Board.
Banks. Credit limits are defined for each • Formal training and development plan
guarantor bank to limit concentration of in place for each critical position.
risks. Source of Risk: Internal • Human Resource policies developed
with focus on employee retention and
Movements in foreign Low Low • The Company’s treasury function actively engagement.
exchange rates monitors FX movements and manages the • Employee Engagement surveys
adversely affecting the Company’s open positions accordingly. conducted annually by independent
Company consultants to assess employee
engagement level.
Interruptions to critical Low Medium • Formal Business Continuity Plan (BCP)
Allocation of expensive Medium High • Continue to convince the government to business operations due complemented by a formal Disaster
gases to old plants at provide a level playing field to all to disruptions or Recovery Plan (DRP) in place for all
Petroleum Policy 2012 players by allocating gas on Fertilizer disasters such as fire, locations to ensure resilience and built
making them Industry rate in line with the Fertilizer floods, earthquakes, capability for an effective response that
uncompetitive Policy as charging higher prices explosions, terrorism, safeguards the interest of key
Source of Risk: External increases the cost of doing business. tornadoes, extended stakeholders, reputation, brand and value
power interruptions, creating activities.
Imposition of GIDC on Medium High • Continue to convince the government to hazardous chemical • The BCP is reviewed on a periodic basis
concessionary plants fulfil its commitment in line with the spills, and to ensure it is up to date and effective.
which has significant Fertilizer Policy 2001 on the basis of other natural or
impact on Company’s which we invested USD 1.1 billion. man-made disasters
bottom line • Continue to pursue litigation against
GIDC on concessionary gas. Source of Risk:
Source of Risk: External External / Internal
Operational Risks
Depletion of allocated • The Company is actively evaluating Political / Economic Risks
Medium High
gas field affecting alternate sources of gas. Influence of the Medium Medium • The Company continuously monitors
production of Urea Government over price market dynamics and its cost structures
Source of Risk: External regulations and ensures that product pricing is
reflective of the same.
• The Company is currently selling urea at
prices mush lower than the imported urea
by approximately PKR 700 per bag.
• The Company through various forums will
continue to highlight its position, as a
player of deregulated industry, and its
contribution to the agriculture sector and
the economy of Pakistan.
OPPORTUNITY ANALYSIS
The Company is committed to its vision of transforming the agricultural landscape, bringing change
and helping the farmer grow. The Company continuously seek opportunities for enhancement of
revenues, optimization of costs and efficiencies, and undertaking of diversification projects to
continue providing attractive returns to the shareholders.
Key Opportunity Impact Area Way Forward
Improvements in Manufactured The Company realizes the importance of

operational efficiencies Capital fertilizers for the economy and plans to
incur capital expenditure to improve
reliability and efficiency of both Urea
plants. During the year the Company made
significant capital investments in feed gas
enrichment and compression facilities
which will enable the Company to enhance
plant production and efficiency.
Availability of unutilized Natural Capital The Company is actively exploring

production capacity additional sources of gas to utilize its
production capacity and enable steady
supply of Urea to farmers
Develop Horizontal / Financial Capital The Company continues to explore

Vertical Integration opportunities within the agriculture sector
in Pakistan to create value for its
stakeholders by leveraging its strong
position in the Agri space. The Company
will continue to expand its footprint in the
Crop Sciences business (seeds and
pesticides) and is evaluating other
business opportunities in the local agri
space to improve farmer productivity.
Low farm yields in Social Capital The Company plans to expand its footprint
Pakistan compared to in local Agri-value chain. While growing in
regional peers the Agribusiness Solutions space, the
Company aims to improve farmer
economics and contribute positively to
Pakistan’s economic and resource
ecosystem by focusing on initiatives that
increase agri-import substitution, grow
national agri-exports and agriculture yield
enhancement.
corporate governance
board committees functional committees
The board has established the following two committees: These committees act at the operational level in an advisory capacity to the
Chief Executive, providing recommendations relating to businesses and
employee matters.
Board Compensation Committee (BCC) Board Audit Committee (BAC) Management Committee Committee for Organizational and
The committee meets multiple times through the year The committee meets at least once every quarter and Management Committee is headed by the President & Employee Development (COED)
to review and recommend all elements of the assists the Board in fulfilling its oversight CEO, and includes the functional heads of all
Compensation, Organization and Employee responsibilities, primarily in reviewing and reporting departments. The committee meets to discuss The COED is responsible for the review of
Development policies relating to the senior executives' financial and non-financial information to Company’s performance and works in an advisory Compensation, Organization, Training and
remuneration and to approve all matters related to the shareholders, systems of internal control and risk capacity to the President & CEO. Development matters of all employees. The members
remuneration of the executives of the company and management and the audit process. It has the power of COED at Engro Fertilizers are as follows:
members of the management committee. to call for information from management and to Members
consult directly with the external auditors or their Members
The Chief Executive Officer attends Board advisors as considered appropriate. Nadir Salar Qureshi – Chairman
Compensation Committee meetings by invitation. The Amir Iqbal Nadir Salar Qureshi – Chairman
committee met twice during 2018. The Chief Financial Officer regularly attends the Board Syed Shahzad Nabi Amir Iqbal
Audit Committee meetings by invitation to present the Mohsin Ali Mangi Imran Ahmed
Members accounts. After each meeting, the Chairman of the Imran Ahmed Mohsin Ali Mangi
Committee reports to the Board. The Committee met Fahd Khawaja Fahd Khawaja
Mr. Javed Akbar – Chairman four times during 2018. Muhammad Majid Latif Azhar Malik
Mr. Ghias Khan Muhammad Azhar Malik Majid Latif
Mr. Abdul Samad Dawood Members
The Secretary of the Management Committee is The Secretary of the COED is Syed Shahzad Nabi.
The secretary of the Committee is Syed Shahzad Asad Said Jafar – Chairman Ms. Rabia Wafah Khan.
Nabi, VP HR, PMM & Administration. Javed Akbar
Sadia Khan
Salient features of terms of reference
The Secretary of the Committee is Syed Mohammed
The terms of reference of the BCC are defined in the Ali, Head of Internal Audit.
Corporate HSE Committee Six Sigma Corporate Council
charter of the committee. The salient features are This committee is responsible for bringing in This council oversees the implementation of Six
mentioned below: excellence in the sectors of Health, Safety and Sigma.
Salient features of terms of reference
Environment.
• To ensure Corporate standards / Human The terms of reference of the Board Audit Committee Members
Resource policies and fundamental beliefs are are defined in the Charter of the Committee, duly Members
aligned with the Corporate guidelines approved by the Board of Directors. The salient Nadir Salar Qureshi – Chairman
• To recommend the performance evaluation, features are stated below: Nadir Salar Qureshi – Chairman Amir Iqbal
development and succession plans of the Amir Iqbal Syed Shahzad Nabi
Company’s executives • To recommend to the Board the appointment and Syed Shahzad Nabi Mohsin Ali Mangi
• Review the Company’s management resources, removal of external auditors Imran Ahmed Imran Ahmed
succession planning and development activities • To review quarterly, half-yearly and annual Mohsin Ali Mangi Fahd Khawaja
• Review and approve relevant Human Resource financial statements Fahd Khwaja Muhammad Majid Latif
policies • To review the internal control systems and internal Azhar Malik Muhammad Azhar Malik
audit function Majid Latif
• To review the enterprise risk management system Afsah Ahrar – Secretary & Six Sigma Coordinator MFG
and assess the adequacy and monitoring of the The Secretary of the Corporate HSE Committee is
same by the management. Asim Rasheed Qureshi
• To monitor management’s compliance with all
Company’s policies including complaints
received through the Speak Out – Whistle Blower
Policy
• To monitor compliance of statutory requirements
our governance framework •
•
to invest and divest funds of the company
to determine the nature of loans and advances
• to issue letter to directors setting out their role,
obligations, powers and responsibilities at the
With a strong legacy system spanning over four decades, Engro Fertilizers continues to optimize its beginning of term of each director
governance framework by institutionalizing its core values, policies and principles across the board. made by the Company and to fix monetary limit
thereof • set the agenda of the meeting of the Board and
• to authorise a director or the firm of which he is a ensure that reasonable time is available for
partner or any partner of such firm or a private discussion of the same
company of which he is a member or director to • ensure that the minutes of meetings of the board
Board Of Directors the meetings. enter into any contract with the company for of directors are kept in accordance with the
The Board of Directors carries out its duties with a For information on remuneration of Directors and CEO making sale, purchase or supply of goods or requirements of Section 178 and 179 of the
sense of objective judgment and in good faith in the in 2017-18, please refer notes to the Financial rendering services with the company Companies Act, 2017
best interests of the Company and its stakeholders. Statements. • to approve financial statements Chief Executive Officer (CEO):
There are eight (8) numbers of Directors on the Board,
The Company has a documented policy which • to approve bonus to employees Roles and responsibilities of the Company’s CEO are
comprising of four (4) Independent Directors, three (3)
generally restricts employees from holding duly assigned by the Board of Directors of the
Non-Executive Directors and one (1) Executive • to incur capital expenditure on any single item or
directorships in companies that are not subsidiaries or Company. The Chief Executive Officer is vested with
Director. The Board collectively has the responsibility dispose of a fixed asset in accordance with the
joint ventures of Engro Corporation Limited. However, the general control of the business of the Company
for ensuring that the affairs of the Company are limits as may be specified
the President of Engro Corporation Limited or the and amongst other things, he is empowered to:
governed competently and with integrity. A
Chairman of the Company, may make exceptions to • to undertake obligations under leasing contracts
Non-Executive Director, Ghias Khan, Chairs the Board • enter into any trade contracts on behalf of the
this general rule in special circumstances. exceeding such amount as may be notified
and Mr. Nadir Salar Qureshi is the Chief Executive Company in the ordinary way of business
Officer of the Company. Biographical details of the All expenses incurred by an employee serving as a • to declare interim dividend
Directors are given in the previous section. director of a company that is not a subsidiary or joint • to do all other acts and things in the ordinary
venture of ECL in accordance with this policy will be • having regard to such amount as may be course of business which he may consider
A calendar for the meetings of Board is issued determined to be material (as construed necessary or conducive to the interests of the
for that employee’s own account. The employee may
annually. The meetings schedule significant matters in Generally Accepted Accounting Principles) by Company
accept and retain annual fees, meeting fees, other
as agenda for review, discussion and approval of the the board
remuneration or reimbursed expenses specifically Performance evaluation of CEO
Board. The Board met six (6) times this year (all the
related to service as a director. • to write off bad debts, advances and receivables
Board meetings during the year were held in Pakistan) The performance of the CEO is formally appraised
and discussed matters relating to inter alia long term Performance Evaluation of Directors • to write off inventories and other assets of the through the evaluation system which is based on
planning, giving consideration to both the The Board has developed a formal mechanism for company quantitative and qualitative values. It includes the
opportunities and risks of future strategy. evaluation of board’s own performance, members of • to determine the terms of and the circumstances performance of the business, the accomplishment of
Notices along with agendas of the meetings including board and of its committees. The assessment was in which a law suit may be compromised and a objectives, organization building, succession planning
relevant material, detailed analysis on businesses and carried out twice in the current year and the claim or right in favour of a company may be and corporate success.
information on significant matters where the Board is results/ feedbacks were evaluated to bring released, extinguished or relinquished Policy for related party transactions
required to make a decision or give its approval, are improvement in the evaluation process. The
• to take over a company or acquire a controlling The Company has a documented policy which
circulated to Board members in advance of the performance evaluation focuses on:
or substantial stake in another company states that all related party transactions involving
meetings. • Clarity of agenda and objectives;
• any other matter which may be specified goods, services and transfer of tangible and
Directors’ Orientation Program • Preparation for the meetings; intangible assets will be carried out at arms length
Matters Delegated to the Management without compromising the business interest of either
During the year, the Company arranged an orientation • Quality and diversity of discussions;
course on “Companies Act, 2017 and Code of Management of the Company is entrusted with the party.
Corporate Governance regulation, 2017” for its • Clarity of decisions and outcome responsibility to conduct operations of the Company Responsibilities of Management for the Financial
Directors and Head of Departments to acquaint them Matters decided and delegated by board of adhering to the vision, core values, corporate strategy Statements
with the abovementioned Act and Regulations directors and the policies for conduct of business approved by
Board of Directors. The delegation of authority to the Management is responsible for the preparation and
including their duties and responsibilities to enable
The powers of the Board of Directors and the management has been formally documented in the fair presentation of the financial statements in
them to effectively govern the affairs of the listed
management of the Company have been defined with Limits of Authority Manual (LOAM) which is accordance with the accounting and reporting
Company for and on behalf of shareholders.
special reference to, and in compliance with, the periodically reviewed and appropriately updated. standards as applicable in Pakistan and the
Directors’ Training Companies Act 2017, the Code of Corporate requirements of Companies Act, 2017 (XIX of 2017)
Governance and the Articles of Association of the A brief description about the role of the Chairman and for such internal controls as management
The Board has arranged Directors’ Training program and the CEO
for Mr. Nadir Salar Qureshi during the year. All the Company. determines is necessary to enable the preparation
other directors have already completed this program Chairman of the board: and presentation of financial statements that are free
In addition to approving the vision, core values,
in previous years. from material misstatement, whether due to fraud or
corporate strategy and the policies for conduct of Every meeting of the Board is be presided by a
error.
Directors’ Remuneration business of the Company, the types of decisions Chairman. The chairman of a board meeting by virtue
taken by the Board includes the following: of his position and nature of his duties is responsible Conflict of Interest Among Board Members
The remuneration of the Board members is approved for the leadership of the board and to ensure that the
by the Board itself. However, in accordance with the • to issue shares A formal code of conduct is in place that promotes
board plays an effective role in fulfilling its ethical culture in the company and prevents conflict of
Code of Corporate Governance, it is ensured that no • to issue debentures or any instrument in the responsibilities and amongst other things, he is
Director takes part in deciding his own remuneration. interest in capacity as member of the board, senior
nature of redeemable capital empowered to:
The Company does not pay remuneration to
• to borrow moneys otherwise than on debentures
non-executive directors except for fees for attending
management and other employees. The code of policies and control procedures are documented in formal Disaster Recovery Plan (DRP). The BCP and internal controls and monitoring, and related
conduct also includes a section on fiduciary duties of manuals. The Board establishes overall corporate DRP specifies the policy and procedures policies and procedures
Directors ‘which included the following: strategy and the Company's business objectives. implemented at the Company for the safety of critical
• Maximize the satisfaction level of end user with
• Duty not to place themselves in a position of Divisional management integrates these objectives electronic, hard copy data and processes to ensure
respect to IT services
conflict between their personal interests and into divisional business strategies with supporting all critical functions continue in case of a disruption or
financial objectives. disaster. • Employ a comprehensive sourcing strategy to
those of the company – this includes the duty to
manage third parties/vendors relationships
disclose any such personal interests to the Review: The Board meets atleast once in a quarter, to The main purpose of the Company policies for safety
Company and the duty not to make secret and/or consider the Company‘s financial performance, of ERP systems and business records are as follows: Whistleblower Policy – “Speak Out!”
incidental profits at the expense of the company. financial and operating budgets and forecasts, The Board of Directors of the Company have
• Define roles and responsibilities of all functions
• Duty to account for profits, and not to make business growth and development plans, capital established a Whistleblower system which allows
and departments to ensure that a proper
secret or incidental profits. expenditure proposals and other key performance employees, suppliers, customers and contractors to
mechanism is in place within their department for
indicators. speak out about any concerns they have regarding
• Duty not to act on behalf of Company in any backup of electronic data and digitization and
The Board Audit Committee receives reports on the archival of critical hard copy documents. business ethics, safety, environmental performance,
matter in which he/she has an interest that
system of internal financial controls from the external harassment and other employment related matters or
conflicts, or may conflict, with his duties to his/her • Define arrangements for storage of ERP systems
and internal auditors and reviews the process for other possible breaches of compliance. The Company
company. and business data at secure location with state of
monitoring the effectiveness of internal controls. also has specific procedures in place to increase
The Directors’ of the Company excuse the art protections against physical deterioration,
awareness of the policy.
themselves from the meetings when the matters There is a Company-wide policy governing appraisal fire, natural disasters etc.
and approval of investment expenditure and asset In order to further strengthen the Company’s Ethics
under discussion involve a conflict or potential • Availability of suitable alternate site for backup of
disposals. Post completion reviews are performed on compliance program and promote adherence to
conflict of interest with the activities of any critical information systems including defining the
all material investment expenditure. sound business conduct, all employees, customers,
undertaking in which they may hold a real or methodologies for replication of applications on
suppliers and contractors are encouraged to report
beneficial interest. Audit: Engro Fertilizers has an Internal Audit function, the alternate site based on industry best
serious concerns that could have a significant impact
manned with suitably qualified and experienced staff. practices.
Compliance Statement on these organizations, such as actions that:
The Board Audit Committee annually reviews the
The Board of Directors has duly complied with the • Provide mechanism and arrangements for
appropriateness of resources and authority of this • are unlawful or may damage the reputation of the
Listed Companies (Code of Corporate Governance) digitization (through a Document Management
function. The Head of Internal Audit functionally Corporation or an affiliate
Regulations, 2017 and the 'Corporate and Financial Solution) and archival of critical hard copy data
reports to the Audit Committee. The Board Audit • are fraudulent and lead to a loss of assets
Reporting Framework' of the Securities & Exchange and for backup of critical electronic data.
Committee approves the audit program, based on an
Commission of Pakistan. annual risk assessment of the operating areas. The Disclosure of IT Governance Policy. • may be intended to result in incorrect financial
Internal Audit function carries out reviews on the reporting
Risk Management Process Information Technology (IT) Governance is an integral
financial, operational and compliance controls, and part of enterprise governance and consists of the • are in violation of various corporate policies
The Board at Engro Fertilizers periodically reviews reports on findings to the Board Audit Committee, Leadership, Organizational Structures and Processes. governing business conduct
major financial and operating risks faced by the Chief Executive and the divisional management.
business. We also continue to operate an IT Governance aims to ensure that IT activities are • are in violation of Safety Health & Environmental
Enterprise-wide Risk (ERM) system to proactively Investors’ Grievance Policy aligned with business objectives and that stakeholder standards applicable to the business
highlight risks associated with the business and requirements of Value Delivery, Risk Optimization, and
The Company strives to develop and maintain • give rise to harassment, discrimination or other
deploy appropriate mitigation strategies that feed into Resource Optimization are addressed. The Enterprise
trustworthy relations with all its stakeholders, including unfair employment practices
our governance framework. Detail on the Company’s IT Governance Framework aims to achieve the
shareholders and investors. It recognizes the
ERM programe is mentioned in the Risk and following objectives: As per the requirements of the policy, confidentiality of
importance of timely and fair disclosure of all material
Opportunities section of this annual report. • Alignment of IT goals with business complainants is maintained to protect them from any
information to them, without advantage to any
form of retaliation or victimization for genuinely held
Internal Control Framework particular investor, group or investment advisor / • Meet stakeholders’ requirements relating to risk concerns that are raised in good faith. Further, all
analyst, in order to enable them to make informed optimization, resource optimization and value
Responsibility: The Board is ultimately responsible to concerns reported are investigated confidentially by
decisions about investing in the Company. delivery
ensure that a system of sound internal control is the Corporate Audit Department (CAD) which are also
established, which is effectively implemented and The Company’s contact details are disclosed in • Support the decision-making process regarding presented on a quarterly basis to the Board Audit
maintained at all levels within the Company. However, “Company Information” section of this annual report governance and management of IT by providing Committee (BAC).
such a system is designed to govern rather than and on it’s website under “Investors relation” section sufficient information and reports Concerns can be raised at “Speak Out” hotline
eliminate the risk of failure to achieve business to facilitate shareholders / other investors’ and timely
• Achieve effective and prudent IT project +9221-35296012, email to
objectives. The Board, whilst maintaining its overall resolve their complaints, if any.
management and IT resources management speakout.fertilizers@engro.com or written to P.O. Box
responsibility for governance of risk within the Policy for safety records of the company. 3851, Clifton Post Office, Karachi
processes
Company, has delegated the detailed design and
operation of the system of internal controls to the Chief The Company has a documented Record Retention • Enabling enterprise business strategies by Human resource management policies including
Executive. Policy to ensure the safety of the records for periods developing technological infrastructure and preparation of a succession plan.
that exceed the minimum requirement prescribed by information systems
Framework: The Company maintains an established The Company has a documented Human Resource
Companies Act, 2017 and other applicable regulatory
control framework comprising clear structures, • Ensure the necessary protection of assets management policy which aims to attract, induct,
requirements.
authority limits, and accountabilities, well through optimization of IT Risk Management develop, retain and motivate high calibre talent who
communicated and understood policies and In addition, the Company has a formally documented are qualified, capable and willing to contribute their
Business Continuity Plan (BCP) complemented by a • Comply with legal and regulatory requirements,
procedures and budgeting for review processes. All best towards accomplishment of Company objectives.
To complement this policy several other policies have tools and resources to perform at the job. The interim basis, thereby helping to ensure that all critical • Organizational overview and external
been developed for recruitment, compensation and Company has also initiated the Leadership Pipeline business functions continue in the case of a disruption environment
organizational development. The Company’s HR Development Framework, which encompasses a or disaster.
• Governance
policies have been developed encompassing holistic approach to People Development covering This plan is carefully followed during periodic testing
following principles: aspects like on-going coaching, rotations and Cross • Business model
exercises to thoroughly train recovery personnel and
Functional Projects. In addition to this, Mentorship is ensure that strategies and actions accurately reflect • Risks and opportunities
Equal Opportunity
also an integral part of the system along with a Top current business recovery requirements. • Strategy and resource allocation
• Provide equal opportunity to all job applicants Talent Strategy to ensure focused upward mobility. Interaction with major shareholders • Performance
through clearly defined and consistently applied
induction standards. Social and Environmental Responsibility Policy Engro Corporation Limited continues be the major • Outlook
The Company believes that businesses, in their shareholder in the Company and its President & CEO
• Create a work environment where every is also the Chairman of the Company’s Board of • Basis of presentation
employee has an equal opportunity to develop normal course of operations, create positive and
Directors. Efforts to Implement Governance Practices
their skills and talents. adverse impacts. The Company is committed to
improve it’s understanding of social and Further, other interactions include the annual general Exceeding Legal Requirements
Training and Development environmental impacts of it’s business and it will meeting, extra ordinary general meetings, corporate With a strong legacy system spanning over five
quantify the impact on the lives of it’s customers, briefings/road shows, responding to investor queries decades, Engro Fertilizers continues to optimize its
• To meet employee and organizational needs, either raised on email, website or on telephone.
provide opportunities to employees for suppliers and communities in which it operates and governance framework by institutionalizing its core
will strive to minimize adverse impacts. The Investors’ Relations Section on Corporate Website values, policies and principles across the board to
acquisition of knowledge for technical and
associated funding requirement will be part of the surpass the legal requirements and adhere to global
managerial skills through classroom and The invetors’ relations section on the Company’s Best Practices and Standards of governance.
on-the-job learning. business cost. website (www.engrofertilizers.com) is updated
regularly to provide detailed and latest company Following additional governance practices
Performance Management The Company’s Social Responsibility policies and
information including financial highlights, investor implemented by the management include:
practices include:
• Have a transparent and merit based performance information and other requisite information. • Voluntary disclosure of additional corporate and
management system in place. • Statement of ethics and business practices Furthermore, the Company’s website also contains the financial information in this annual report for the
link to SECP’s investor education portal, ‘Jamapunji’. year ended 2018, although not required by any
• Have a formal career development and • Policy for handling conflict of interest
Issues Raised at Last AGM law, to make the Company’s affairs more
succession planning system. • Employee Code of Conduct transparent and to give better insight of the
The Company’s Annual General Meeting was held on Company’s affairs, policies and strategies.
• Clearly defined system for career progression • Policy for soliciting customers, suppliers, vendors March 26, 2018, queries and clarifications were
based on merit and potential. and contractors sought on the Company’s financial statements, which • Implementation of Health, Safety and
Compensation and Benefits were resolved to the satisfaction of the Shareholders. Environment Policy for better and safe work
• Allocation of approximately 1% of profit before
place environment for employees, workers and
• Rewards policies aligned with best companies in taxes for social investments Javed Akbar (then BAC Chairman) was present in the surrounded community.
the market that compete for high quality talent. last AGM.
The Company aims to be recognized as a world class • Implementation of various social projects for
• Clear linkage of reward policies with performance performer in the field of Health, safety and Compliance of International Financial Reporting welfare of the community as part of it’s Corporate
environmental management. For this it will: Standards (IFRS) Social Responsibility (CSR).
and potential.
• Comply with all applicable environmental laws, The management of the Company strongly believes in • Adoption of a strict insider trading policy
Diversity and Non-Discrimination adherence to unreserved compliance with all the
regulations and apply responsible standards whereby all employees of the Company are
• Provide an environment free from all forms of applicable International Accounting Standards (IAS) / restricted from trading in shares of the Company.
where law and regulations does not exist
discrimination and harassment at workplace. IFRS issued by International Accounting Standards
• Conserve natural resources & energy by Board (IASB) and as adopted by SECP vital to fair • Restriction of employees of group companies to
• Foster gender diversity at all levels within the continuously improving our processes and preparation and presentation of financial information. adhere to close period requirements.
Company measuring performance Compliance to IFRS encourages sufficient disclosures • All of the Directors of the company have attended
• Policies aimed at creating flexible and conducive of the financial statements that are beneficial for Directors’ training program exceeding the legal
• Continuously improve our processes to minimize informed decisions of stakeholders. Financial
working arrangements for all. requirement prescribed by Code of Corporate
pollution and waste statements for the year have been prepared in Governance Regulations, 2017.
The Company’s Succession Planning policy is aimed ‘Corporate Social Responsibility’ section of the accordance with the accounting and reporting
at ensuring seamless business continuity, through a standards issued by IASB as are applicable in • The Company endeavors to replicate the best
Directors’ report to the shareholders outlines the practices to its privately owned subsidiaries.
stronger talent pipeline for future leadership positions. Pakistan. IFRS adoption status is in detail is explained
Company’s Social and Environmental practices and in note 3 of annexed consolidated financial
Keeping People Development at the core and Steps taken by the management to encourage
interventions during the year. statements.
recognizing that change is imminent, focus is on skill minority shareholders to attend the general
enhancement through an indigenous learning Disaster Recovery and Business Continuity Integrated Reporting meetings
architecture called Transitional Training Model (TTM) Planning
The Company is committed towards adoption of Notice of Annual General Meeting is sent to all
for all current and future business needs to ensure The Company has a documented Disaster Recovery International Integrated Reporting (IR) Framework to shareholders of the Company at least twenty-one days
readiness in times of dynamicity. Career growth for Plan (DRP) and Business Continuity Plan (BCP) which give an overview of how the Company’s strategy, before the date fixed for meeting. Such notice is
employees has also been mapped keeping in view, describes the business continuity and recovery governance, performance and prospects, in the published in Urdu and English languages in at least in
the individual’s potential, experience, display of Engro strategies and related procedures for the Company. It context of its external environment, leads to the one issue each of daily newspaper of respective
competencies along with other factors. Each also provides policies and procedures whereby the creation of value over the short, medium and long language having nationwide circulation Further, notice
employee is provided training and development critical business processes can be restored in a timely term. The Company has considered the following of AGM is also placed on Company’s website. The
opportunities and is equipped with the necessary and orderly manner and can be operated on an content elements of IR Framework in this report: Company encourages maximum participation from all
the shareholders including minority shareholders.
stakeholders’ engagement policy report of the audit committee
The Company regards its stakeholder engagement as an important element of corporate responsibility. It
believes that adherence to the highest ethical standards fosters trust. The Company considers itself to be
answerable to its stakeholders, customers, vendors, suppliers, and the communities where it operates. Composition
The Committee is appointed by the Board and at the year-end comprised of three Independent Directors.
Frequency of Engagement Directors:

S. No. Stakeholder Group Engagement Process Effect and Value
Mr. Asad Said Jafar - Chairman
1 Analysts Quarterly Analyst briefings Helps in responding to various queries and
Mr. Javed Akbar - Member
clarifying the Company’s stance in the
market to create a positive and transparent Ms. Sadia Khan - Member
image of the Company.
Mr. Asad Said Jafar holds a bachelor’s degree in Electrical Engineering from NED University, Karachi and an
2 Shareholders Regular Annual General Engagement allows the Company to MBA degree from Imperial College Business School, London, UK.
meeting, annual increase the confidence of providers of
and quarterly capital. The Head of Internal Audit of the Company, functions as the Secretary to the Committee.
reports.
Charter of the Committee
3 Customers and Regular Periodic formal The success of the Company depends
suppliers and informal upon the loyalty of our customers and
meetings / well-being of our customers and suppliers. The terms of reference of the Committee are clearly defined in the Charter of the Committee which is duly
conferences and Our continuous engagement enables us to approved by the Board of Directors. The salient features are stated below:
technical support understand our customer needs and come
services up with the right products for them. • To recommend to the Board the appointment andremoval of external auditors.
• To review quarterly, half-yearly and annual financial statements.
4 Banks and Regular Meetings on Access to the financial markets to pursue
other lenders negotiation of growth of the Company.
• To review the internal control systems and internal audit function.
rates on various • To review the enterprise risk management system and assess the adequacy and monitoring of the same by
financing matters, the management.
• To monitor management’s compliance with all Company’s policies including complaints
5 Media Occasional Different Effective awareness is created regarding received through the Speak Out – Whistle Blower Policy.
communication the Company, its products and services • To monitor compliance of statutory requirements.
mediums such as offered, indirectly having a positive impact.
press releases are
used on need
Meetings during 2018
basis to apprise
the general public The Committee met four times during the year. The attendance of the members at these meetings is stated in
about new the Director’s Report. The Chief Financial Officer and the Head of Internal Audit attended all meetings. The
developments external auditor attends meetings when matters pertaining to their functions come up for consideration and
and activities attended two meetings during the year.
6 Regulators Regular Meetings with Understanding and ensuring all legal and
officials, regulatory requirements are complied with. Role of the Committee
submissions of
data for Engaging with the government to address The Committee assists the Board to effectively carry out its supervisory oversight responsibilities on financial
review and matters impacting the cost of doing reporting and compliance, internal controls and risks, internal and external audit functions of the Company.
compliance business such as GIDC, subsidy and sales
tax receivables. The Committee has concluded its annual review of the operations of the Company for the year ended
December 31, 2018 and reports that:
Ensure continuation of the common
objective of the Government and the
Company to transform the agriculture • The Committee reviewed the quarterly and annual financial statements of the Company and
landscape of Pakistan. recommended them for approval of the Board
7 Local Regular Meetings and • Community engagement, an enabling • Appropriate accounting policies have been consistently applied and all applicable accounting
Committees one-on-one part of our social investment. standards were followed in preparation of the financial statements for the year ended December
engagements 31,2018, which present fairly the state of affairs, results of operations, profits, cash flows, and
• The ability to incorporate needs and
changes in equity of the Company
values of people living in communities in
policy development and planning,
decision-making, service delivery and • The Chief Executive Officer and the Chief Financial Officer have reviewed the financial
assessment is at the heart of smart statements of the Company. They acknowledge their responsibility for true and fair presentation of
sustainable social interventions. the financial statements, accuracy of reporting and compliance with regulations and applicable
accounting standards
independent auditor’s review report
• Accounting estimates are based on reasonable and prudent judgement.
• Proper, accurate and adequate accounting records have been maintained by the Company.
• The Company’s system of internal control issound in design and has been continually evaluated for
effectiveness and adequacy.
• The Committee has reviewed all related party transactions and recommended them for approval of the
Board. To the members of Engro Fertilizers Limited
• Closed periods were duly determined and announced by the Company, precluding the directors, Review Report on the Statement of Compliance contained in Listed Companies (Code of Corporate Governance)
executives and all employees of all Engro companies from dealing in the shares of the Company, prior to Regulations, 2017
each Board meeting involving announcement of interim / final results, distribution to shareholders or any
other business decision which could materially affect the share price. We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate Governance)
Regulations, 2017 (the Regulations) prepared by the Board of Directors of Engro Fertilizers Limited for the year ended December
Internal Audit 31, 2018 in accordance with the requirements of regulation 40 of the Regulations.
• The Board has effectively implemented the internal control framework through the Internal Audit The responsibility for compliance with the Regulations is that of the Board of Directors of the Company. Our responsibility is to
Department, manned with suitably qualified staff. review whether the Statement of Compliance reflects the status of Company’s compliance with the provisions of the Regulations
and report if it does not and to highlight any non-compliance with the requirements of the Regulations. A review is limited
• The Internal Audit function reviews the risks and control processes in accordance with the internal primarily to inquiries of the Company’s personnel and review of various documents prepared by the Company to comply with
audit plan approved by the Committee. the Regulations.
• The Committee reviews the findings and observation of the internal audit and provides appropriate As a part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal
guidance to the management. control systems sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether
the Board of Directors’ statement on internal control covers all risks and controls or to form an opinion on the effectiveness of
• The Committee met with the internal audit in the absence of the management. such internal controls, the Company’s corporate governance procedures and risks.
External Audit The Regulations require the Company to place before the Audit Committee, and upon recommendation of the Audit Committee,
place before the Board of Directors for their review and approval, its related party transactions and also ensure compliance with
• The statutory auditors of the Company, A. F. Ferguson & Co., Chartered Accountants, have completed their the requirements of section 208 of the Companies Act, 2017. We are only required and have ensured compliance of this
audit assignment of the Company’s financial statements and the statement of compliance with the Code of requirement to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of
Corporate Governance for the year ended December 31, 2018 and shall retire on the conclusion of the 10th the Audit Committee. We have not carried out procedures to assess and determine the Company’s process for identification
Annual General Meeting. of related parties and that whether the related party transactions were undertaken at arm’s length price or not.
• The Committee has reviewed and discussed audit observations with the external auditors. A meeting was Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does
also held with the external auditors in the absence of the management. not appropriately reflect the Company's compliance, in all material respects, with the requirements contained in the Regulations
as applicable to the Company for the year ended December 31, 2018.
• The external auditors have direct access to the Committee and Internal Audit Department, hereby
ensuring the effectiveness, independence and objectivity of the audit process.
• The performance, cost and independence of the external auditors is reviewed annually by the Committee.
Being eligible for reappointment under the Code of Corporate Governance, the Committee has
recommended to the Board the reappointment A.F. Ferguson and Co., Chartered Accountants for the year
2019. A resolution to this effect has been proposed at the forthcoming Annual General Meeting. A. F. Ferguson & Co.,
Chartered Accountants
Asad Said Jafar Karachi

Chairman, Audit Committee Date: March 6, 2019
Engagement Partner: Waqas Aftab Sheikh
statement of compliance with listed companies
(code of corporate governance) regulations, 2017
11. CFO and CEO duly endorsed the financial statements before approval of the Board.
year ended december 31, 2018 12. The Board has formed committees comprising of members given below:
a. Audit Committee: Mr. Asad Said Jafar – Chairman

The Company has complied with the Requirements of the regulations in the following manner:
Mr. Javed Akbar
Ms. Sadia Khan
1. The total number of directors are eight as per the following:
b. HR and Remuneration Mr. Javed Akbar – Chairman
a. Male: Seven*
Committee i.e. Board Mr. Ghias Khan
Compensation Committee: Mr. Abdul Samad Dawood
b. Female: One
* One casual vacancy occurred on the Board on December 1, 2018 which was duly filled 13. The Terms of reference of the aforesaid Committees have been formed, documented and advised to the
with in the prescribed time period subsequent to the year end. committee for compliance.
2. Composition of the Board is as follows: 14. The frequency of meetings of the Committee were as per following:
a. Board Audit Committee - Quarterly
a. Independent Directors Mr. Asim Murtaza Khan b. HR & Remuneration Committee i.e. Board Compensation Committee – Half yearly
Mr. Javed Akbar
Mr. Asad Said Jafar 15. The Board has set up an effective internal audit function who are considered suitably qualified and
Ms. Sadia Khan experienced for the purpose and are conversant with the policies and procedures of the Company.
b. Executive Directors Mr. Nadir Salar Qureshi
16. The statutory auditors of the Company have confirmed that they have been given a satisfactory rating
c. Non-Executive Directors Mr. Abdul Samad Dawood under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP) and
Mr. Ghias Khan registered with Audit Oversight Board of Pakistan, that they or any of the partners of the firm, their
spouses and minor children do not hold shares of the Company and that the firm and all its partners are
in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as
3. The Directors have confirmed that none of them is serving as a Director on more than five listed adopted by the ICAP.
companies, including this Company (excluding the listed subsidiaries of listed holding companies where
applicable). 17. The statutory auditors or the persons associated with them have not been appointed to provide other
services except in accordance with the Act, these regulations or any other regulatory requirement and the
4. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps have been auditors have confirmed that they have observed IFAC guidelines in this regard.
taken to disseminate it throughout the Company along with its supporting policies and procedures.
18. We confirm that all other requirements of the Regulations have been complied with.
5. The Board has developed a vision/mission statement, overall corporate strategy and significant policies of
the Company. A complete record of particulars of significant policies along with the dates on which they
were approved or amended has been maintained.
6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken
by the Board/shareholders as empowered by the relevant provisions of the Act and these Regulations.
7. All the meetings of the Board were presided over by the Chairman. The Board has complied with
requirements of Act and the Regulations with respect to frequency, recording and circulating minutes of
meeting of Board.
8. The Board of Directors have a formal policy and transparent procedures for remuneration of Directors in
accordance with the Act and these Regulations.
9. The Board has arranged Directors’ Training program for Mr. Nadir Salar Qureshi during the year. All the
other directors have already completed this program in previous years.
10. The Board has approved appointment of CFO, Company Secretary and Head of Internal Audit, including
their remuneration and terms and conditions of employment and complied with relevant requirements of
the Regulations.
Ghias Khan Nadir Salar Qureshi
Chairman Chief Executive Officer
independent assurance report on
statement of compliance with the sukuk
(privately placed) regulations, 2017
Sukuk in accordance with the requirements of Sukuk (Privately Placed) Regulations, 2017 and is free from material
INDEPENDENT ASSURANCE REPORT TO THE BOARD OF DIRECTORS ON THE misstatement.
STATEMENT OF COMPLIANCE WITH SUKUK (PRIVATELY PLACED) REGULATIONS, 2017
The procedures selected by us for the engagement depend on our judgment, including an assessment of the risks of
Scope of our Work material non-compliances with the Criteria. In making those risk assessments; we have considered internal controls
relevant to the Company’s compliance with the Criteria in order to design procedures that are appropriate in the
We have performed an independent assurance engagement of Engro Fertilizers Limited (the Company) to express an circumstances, for gathering sufficient appropriate evidence to determine that the Company was not materially
opinion on the annexed Statement of Compliance (the Statement) with the requirements of Sukuk (Privately Placed) non-compliant with the Criteria. Our engagement was not for the purpose of expressing an opinion on the effectiveness
Regulations, 2017 as notified by the Securities and Exchange Commission of Pakistan as of December 31, 2018. of the Company’s internal control.
Applicable Criteria Our procedures applied to the selected data primarily comprised of:
The criteria for the assurance engagement against which the underlying subject matter (Statement of Compliance for - Inquiry and evaluation of the systems, procedures and practices in place with respect to the Company’s
the year ended December 31, 2018) is assessed comprises of compliance with the features and Shariah requirements compliance with the Criteria;
of Sukuk in accordance with the requirements of Sukuk (Privately Placed) Regulations, 2017. Therefore, the underlying
subject matter may not be suitable for another purpose. Our engagement was carried out as required under Rule 12 of - Verification of Sukuk related transactions on sample basis to ensure the Company’s compliance with the
Chapter V of the Sukuk (Privately Placed) Regulations, 2017 as notified by the Securities and Exchange Commission of Criteria during the year;
Pakistan.
- Review of Shariah structure and transaction documents, term sheet and Shariah approval letter issued by the
Responsibility of Company’s Management Shariah Advisor of the Sukuk; and
The responsibility for the preparation and fair presentation of the Statement (the subject matter information) and for - Review of the annexed Statement based on our procedures performed and conclusion reached.
compliance with the features and Shariah requirements of Sukuk in accordance with the requirements of Sukuk
(Privately Placed) Regulations, 2017 is that of the management of the Company. The management is also responsible We believe that the evidences we have obtained through performing our aforementioned procedures were sufficient
for the design, implementation and maintenance of appropriate internal control procedures with respect to such and appropriate to provide a basis for our opinion.
compliance and maintenance of relevant documentation/records. The management is also responsible to ensure that
the personnel involved are conversant with the Criteria for the purpose of the Company’s compliance. Conclusion
Our Independence and Quality Control Based on our independent assurance engagement, in our opinion, the annexed Statement for the year ended
December 31, 2018 has been prepared, in all material respects, in compliance with the features and Shariah
We are independent of the Company in accordance with the International Ethics Standards Board for Accountants’ requirements of Sukuk in accordance with Sukuk (Privately Placed) Regulations, 2017.
Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the
Code) and we have fulfilled our other ethical responsibilities in accordance with the Code.
The firm applies International Standard on Quality Control 1 “Quality Control for Firms That Perform Audits and Reviews
of Historical Financial Information, And Other Assurance and Related Services Engagements” and accordingly
maintains a comprehensive system of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
Karachi
Responsibility of Independent Assurance Provider
Date: March 6, 2019
Engagement Partner: Waqas Aftab Sheikh
Our responsibility is to express our conclusion on the Statement for the year ended December 31, 2018 based on our
independent assurance engagement, performed in accordance with the International Standard on Assurance
Engagements 3000 ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ (ISAE
3000). This standard requires that we plan and perform the engagement to obtain reasonable assurance about whether
the annexed Statement reflects the status of the Company’s compliance with the features and Shariah requirements of
statement of compliance with the sukuk
(privately placed) regulations, 2017
This Statement is being presented to comply with the requirements under Sukuk (Privately Placed)
Regulations, 2017 issued by the Securities and Exchange Commission of Pakistan (SECP). This Statement of
Compliance (the Statement) is for the year ended December 31, 2018.
Engro Fertilizers Limited (the Company) entered into an arrangement for issue of Sukuk amounting to Rs.
3,200 Million on July 08, 2014 for a period of 5 years. We state that the Company is in compliance with the
Sukuk features and Shariah requirements in accordance with the Sukuk (Privately Placed) Regulations, 2017.
We specifically confirm that:
• The Company has established policies and procedures for all Sukuk related transactions to comply with
Sukuk features and Shariah requirements;
• The Company has implemented and maintained such internal control and risk management systems that
are necessary to mitigate the risk of non-compliances of the Sukuk features and Shariah requirements,
whether due to fraud or error;
• The Company has a process to ensure that the management and where appropriate those charged with
governance, and personnel responsible to ensure the Company’s compliance with the Sukuk related
features and Shariah requirements are properly trained and systems are properly updated.
The Sukuk features and Shariah requirements in accordance with Sukuk (Privately Placed) Regulations,
2017 comprises of the following:
a) Requirements of Shariah Structure and Transaction Documents as stated in the approval of Meezan
Bank Limited’s Shariah Advisor, with respect to Sukuk transactions:
a. Investment Agency Agreement

b. Declaration of Trust
c. Musharaka Agreement
d. Payment Agreement
e. Purchase Undertaking
f. Istisna Agreement
g. Agency Agreement
h. Security Documents
b) Guidelines of the relevant Shariah Standards, issued by the Accounting and Auditing Organization of the
Islamic Financial Institutions (AAOIFI), as notified by the Securities and Exchange Commission of
Pakistan (the SECP);
c) Requirements of the relevant Islamic Financial Accounting Standard as notified by the SECP; and
d) Other compliances specified in the Sukuk (Privately Placed) Regulations, 2017 issued by the SECP.

financial review
chairman's message
Dear Shareholders,
On behalf of the Board of Directors, I am pleased to present to you the Annual Report of Engro Fertilizers
showing overall performance of the Company and effectiveness of the leadership in attaining the Company’s
aims and objectives for the year ended December 31, 2018.
Firstly, I would like to offer my gratitude to each one of you for your continued confidence in Engro Fertilizers
as a vehicle for your investment. The trust in us helps us create greater benefits for the country and the
communities in which we operate. This year has been an important one for Engro Fertilizers, with challenges
on multiple fronts. Hence, secondly, I would like to congratulate the entire team of Engro Fertilizers on
achieving incredible milestones this year.
In 2018, we recorded the highest ever profit in the history of Engro Fertilizers and crossed the PKR 100 billion
revenue mark for the first time, while we celebrated our journey spanning five decades: 50 years of
trust – bharosay ke pachaas saal.
Fifty years of trust placed in us by the farmer community whose lives we are determined to improve, and work
tirelessly to uplift. Fifty years of trust placed in us by the people of Pakistan for pioneering in a sector that
remains integral to Pakistan’s food security. Most importantly, fifty years of trust placed in us by you. Your
contribution is critical to our mission and higher purpose of uplifting Pakistan as a whole.
I am pleased to report that the performance of the Board remained par excellence throughout the year, and
their contributions effectively steered the Company towards achievement of its objectives and creation of new
benchmarks, while maintaining its reputation for good governance and providing steady returns to our
shareholders.
We will keep striving to set the standard for corporate governance in Pakistan to ensure that a long-term
focus on prudence, efficiency, and innovation are even more firmly embedded in our DNA. The Board Audit
Committee continues to ensure that the governance structure is fully compliant, while monitoring high
standards of ethics, control procedures, and risks associated with the business as identified by the Board,
whose top priority is to act in the best interest of the shareholder at all times.
It was 50 years ago when foundations of this Company were laid to ensure food security for the nation. Since
then, we have grown significantly and overcome unprecedented challenges to reach this point. However, the
sad reality is that, even today, 40 million Pakistanis are malnourished. The challenge that lies ahead is far
more complex than it was 50 years ago. With water getting scarcer by the day and population on the rise, we
consider it our sacred duty to play a part in increasing the agriculture productivity of the Country. It will
require us to think and act entrepreneurially. It will require us to build eco-systems to facilitate our farming
community by giving them sound advice, the right agri inputs, better equipment, and, most importantly,
access to market. It will require us to invest in new business models powered by technology.
As we march ahead, our aim is to deliver sustainable results in both operational and financial terms and
develop deeper connections with our customers and hosting communities. Investors will find Engro Fertilizers
to be a resilient, tested Company which is defined by its prudent management of risk, steady and sustainable
growth, and willingness to adapt and reinvent when the need arises.
On behalf of the Board, I would like to thank all stakeholders for their trust and support as we look forward to
the evolving market landscape with optimism. I am certain that Engro Fertilizers has all the necessary
ingredients to perform exceptionally each year, deliver on its promises and achieve the expectations of our
stakeholders – most importantly: you. We look forward to your continued support in this very important
journey of making Pakistan food secure and self-sufficient.
Ghias Khan
Chairman
engro fertilizers annual report 2018 84
CEO’s message
Dear Shareholders,
2018 marked an important milestone as your company completed 50 years of its journey in providing high
quality and affordable fertilizers and agri-solutions in the Country. Building on that legacy, 2018 was a year of
exceptional achievements for Engro Fertilizers as many records were made and others broken on production,
sales and profitability. I am extremely pleased to report that your Company crossed the PKR 100 billion
revenue mark and recorded the highest ever profit in its history.
Starting with safety, I am pleased to report that for the first time the Commercial Division achieved a DuPont
Level 4 compliant rating on Safety Systems. Our Manufacturing Team successfully retained Excellence Level
4 in Dupont OHIH Audit. However, we were reminded of the criticality of our relentless devotion to safety
when earlier in the year we suffered a fatality. Philosophy and processes were revisited and revised and we
were reminded that we can never let our vigilance flag on this front.
Against the backdrop of a rapidly evolving environment, Engro Fertilizers, anchored by operational
excellence and strong leadership, was able to deliver record results. For the year 2018, consolidated profit
after tax stands at PKR 17.4 billion, versus PKR 11.2 billion in 2017 and consolidated earnings per share
increased to PKR 13.04 vs. PKR 8.36 last year. Our shareholders seek us out and trust Engro Fertilizers to
consistently create value for them. In that spirit, I am delighted to report that in addition to interim dividends
already paid at PKR 8.0 per share, we are proposing a further dividend of PKR 3.0 for the year ended
December 31, 2018 for approval of the members at the Annual General Meeting to be held on March 28,
2019, bringing the total dividend for 2018 to PKR 11.0 per share.
On the Manufacturing front, our Daharki plant bore witness to some of the highest ever urea production levels
with both plants operating at high load factors. Plant-2 turnaround was completed successfully and going
forward, the commissioning of ENCOP-3 fourth compression unit is expected to improve business
sustainability. Our Zarkhez Plant at Port Qasim also successfully completed an extensive turnaround sooner
than planned.
Our Commercial Division’s focused efforts resulted in improvement in dealer spread and surpassed all
previous sales records to close the year at an all time high. This was also the first year when our Phosphates
business started functioning as a separate business unit and captured nearly a third of the market. The
Specialty Fertilizer Business improved its potash market share and launched four new products. Our Crop
Sciences Division launched 19 new products and has a robust product pipeline, both in seed varieties and
crop protection products. Engro continues to deepen its participation across the agri-value chain and we
look forward to building out our product portfolio in 2019.
People development is imperative for the success of any organization and a cornerstone of Engro. Our HR
developed and executed the Transitional Training Model, a novel capability building intervention focusing on
functional and management skills enhancement. Ninety percent of management employees were trained and
with the launch of the new Engro Leadership Academy, additional trainings are planned in 2019. This
leadership academy is a critical component in developing and enhancing our current capabilities and
developing a new generation of leaders at Engro. With this initiative, I am certain that our human capital will
continue to appreciate.
Engro Fertilizers strongly believes that a robust and prosperous society is imperative for the growth of our
business. We believe that our growth as an organization is intertwined with the development of society.
Building on this philosophy of inclusive growth, your company continued to undertake community
engagement initiatives and social investments, to combine financial and managerial resources to enrich lives
and pave the way for sustainable growth. During the year, the Company invested PKR 100 million on various
community welfare, education, healthcare, environment and infrastructure development projects in the
Country. We believe that with our unwavering focus on corporate social responsibility, we will continue to play
our role in uplifting and empowering people in the communities in which we operate.

2019 promises to be more challenging as we keep raising the bar. It shall be a year filled with innovations
key numbers
and yet a back-to-basics approach. We are looking at two or more turnarounds at our Daharki plant,
broadening our product reach across the nation and striving towards best practices in supply-chain. There
will be a concentrated focus on engineering excellence, a core differentiator of the Engro brand. In addition
an enhanced focus on improving customer service through capability development of our sales team and
specific technological interventions will enable us to improve the overall customer experience. We will
continue to engage with the relevant stakeholders to allow us to improve our manufacturing capacity
utilization as the nation’s most efficient urea producer.
Our aim is not only to be the best at what we do but to set benchmarks of exemplary conduct at how we do it.
We will strive for excellence, not just by local standards but aim to be at par if not exceed global benchmarks. 1,928 KT
I am convinced that with the support of our unrelentingly committed and talented management team at Engro Urea production
Fertilizers, we shall strive and InshaAllah succeed in exceeding the expectations of all our stakeholders.
On behalf of the Board and the Management Committee, I would like to thank all our employees and
business partners for making Engro Fertilizers what it is today. It is only by the collective efforts of our
exceptionally motivated team and our valued supply chain partners that we are able to be successful. I am
confident that we will achieve our goals in the years to come and deliver on our promises and potential to
transform Pakistan’s agricultural landscape.
2 Plant
operations PKR 109 bn
for the 5th year Revenue in 2018
Nadir Salar Qureshi

Chief Executive Officer
PKR 17 bn 626 KT
highest ever PAT Phosphate sales
1,986 KT
Domestic Urea sales

directors’ report to the
shareholders
109.2 billion for 2018, 42% higher compared to the Local urea demand for 2019 is expected to remain
previous year (PKR 77.1 billion). The increase in sales stable at current levels due to price in-elasticity of
revenue was witnessed on the back of both higher Urea. Production for 2019 is expected to be 5.6 M
fertilizer offtake and prices. tons (excluding LNG plants). The delta between
Gross profit for the year 2018 was PKR 35.3 billion as demand and supply will either be met by imports or
compared to PKR 23.2 billion for the same period last operation of LNG based plants.
year, an increase of 52%. Financial charges declined International DAP prices are expected to remain at
On behalf of the Board of Directors of Engro Fertilizers concessionary gas is in direct contravention of the
to PKR 2.1 billion versus PKR 2.6 billion in 2017 as a relatively the same level in 2019. Local demand,
Limited, we are pleased to submit the Directors’ Fertilizer Policy and our Gas Supply Contracts, on the
result of improvements in working capital. however, is expected to decline slightly due to rising
Report and the audited financial statements of the basis of which we invested USD 1.1 Billion to expand
For full year 2018, the Company has declared a profit DAP prices post rupee devaluation.
Company for the year ended December 31, 2018. our fertilizer manufacturing capacity.
after tax of PKR 16.7 billion (standalone), a significant HEALTH, SAFETY & ENVIRONMENT
Market Review The industry is currently in negotiations with the
increase of 66% over PKR 10.1 billion earned in 2018,
Government over the settlement of past GIDC payable The safety of our workers has always been of
Local urea industry demand remained stable in 2018 resulting in EPS of 12.48 vs EPS of 7.60 in 2017.
and future GIDC liability. paramount importance and a key priority for Engro
with urea offtake at 5,797 KT versus 5,826 KT in 2017. Higher profitability was led by higher urea and DAP
Fertilizers. We work hard to provide a positive health,
The industry also exported 75 KT during the first Segment Analysis offtake and prices coupled with one-off tax effects.
environment and safety culture to our employees
quarter, utilizing the entire export quota of 635 KT These included the impact of the Budget
• Urea backed by processes and training so that HSE is
allotted by ECC since 2017. announcement reducing the corporate tax rate from
The Company produced 1,928 KT of urea, compared second nature to everyone. We remain committed to
Urea production in 2018 clocked in at 5,706 KT vs 30% to 25% in a phased manner.
to 1,807 KT produced in 2017, an increase of 7% due providing the safest working environment to our
5,614 KT last year, an increase of 2%. Higher 2018 consolidated profit after tax stands at PKR 17.4 employees, particularly at our manufacturing facilities
to higher production days compared to last year.
production is mainly attributable to higher production billion, versus PKR 11.2 billion in 2017 due to the while vigilantly fulfilling our environmental duties and
Domestic Urea sales during the year clocked in at
by EFert due to an increase in our production days. reasons explained above. Resultantly, consolidated responsibilities. We also aspire to raise the bar above
1,986 KT compared to 1,739 KT in 2017, exhibiting an
LNG based plants added ~200 KT to industry earnings per share increased to PKR 13.04 vs. PKR globally acceptable standards every year.
increase of 14% YoY due to better avails. Overall, our
production this year, similar to last year with the 8.36 last year.
domestic urea market share stood at 34% vs 30% in However, despite of our efforts and commitment to
allocation of subsidized LNG by the Government.
2017. Dividend HSE, we were reminded of the criticality of our
Moreover, the Government also imported 100 KT urea
• Phosphates The Board is pleased to propose a final dividend of relentless devotion to safety, when earlier in the year
in December 2018 to avoid the issue of urea shortfall.
PKR 3 per share in addition to interim dividend we suffered a fatality. An unfortunate incident
Industry urea inventory as at 31 December 2018, Company sales were recorded at 626 KT in 2018 vs
already paid at PKR 8 per share (total dividend: PKR occurred at one of the evaporation ponds in which a
stood at 0.2 MT vs 0.3 MT last year. 501 KT last year, increasing by 25% YoY, which led to
11 per share) for the year ended December 31, 2018 security guard accidently drowned. A detailed
Local urea prices have increased to PKR 1,740/bag an increase in EFert’s market share to 28% vs 22% investigation of the event was carried out to identify
last year. Sales were significantly higher primarily due for approval of the members at the Annual General
from PKR 1,610/bag in October to pass on the the root cause for the incident. Subsequently, a
to focus on product quality and consistency and Meeting to be held on March 28, 2019.
increase in fertilizer industry gas prices by OGRA. detailed action plan was developed and implemented
While the subsidy on sale price of urea has been improvement in channel management especially in Capital Structure to avoid its recurrence in the future.
discontinued, the domestic industry continues to face Punjab.
In 2018, the Company continued to concentrate its • Upholding the highest levels of
challenges in the form of prior subsidy receivables • Specialty Fertilizer Business efforts on reducing costs of financing; towards this Safety-Certifications achieved during the year
and long lead times in their disbursement. As an end, on the back of improved industry conditions and
industry, we continue to engage with the Government The Company’s Specialty fertilizer (Zarkhez, Engro Engro Fertilizers achieved excellence level (Rating 4)
NP, MOP/SOP/AS) sales registered an increase of higher urea offtake and DAP sales, the Company
for streamlining the subsidy disbursement mechanism delayed its drawdown of long-term loans and raised from DuPont-USA in “Occupational Health & Industrial
and payment of outstanding dues of PKR 20 B. 43% YoY to clock in at 210 KT compared to 147 KT Hygiene Systems”, and a top-notch rating in “Process
last year. The overall potash market increased to 50 PKR 8.2 billion for capex financing, while repaying
PKR 8.3 billion during the year. We plan to gradually Safety Management (PSM) from DuPont in 2018 in an
On the international front, urea prices declined to USD KT in 2018 vs 48 KT in 2017. The Company’s potash
reduce our loan portfolio in the coming years. Long external audit conducted by world renowned experts
300/T (landed equivalent PKR 2,450/bag) from USD market share was at 44% compared to 40% last year
term borrowings at year end 2018 were PKR 30.8 in safety and OHIH systems & standards. We also had
365/T in Q3 2018, due to lower demand from India. on account of better potash avails this year and
billion (2017: PKR 30.9 billion). Total equity as at a successful surveillance audit of IMS and IFA-Protect
DAP demand in the local market decreased by 5% application of potash on non-conventional crops. & Sustain certification.
December 31, 2018 stands at PKR 45.5 billion (2017:
compared to last year, with sales recorded at 2,224KT • Crop Science Division and Agri-Business PKR 42.5 billion). During the year, PACRA upgraded On Food handling and safety, surveillance audits were
vs 2,336 KT in 2017, on the back of escalating DAP Solutions EFert’s long-term credit rating to AA from AA- and conducted, and HACCP certifications were
international prices and rupee devaluation. On the
The Company continues to explore opportunities maintained the short-term credit rating of A1+ successfully sustained for all food clubs and
International front, DAP prices remained in the range
within the agriculture sector in Pakistan to create value respectively. canteens.
of USD 422-435/T during the year.
for its stakeholders by leveraging its strong position in Outlook • Cultivating the Safety-First mindset
Gas Scenario the Agri space. The Company continued to expand its
footprint in the Crop Sciences business (seeds and Globally, urea demand in 2019 is expected to grow We launched “How Might We”, “I Ambassador HSE” &
Gas supply from Mari and SNGPL continued
pesticides) and is evaluating other business marginally by 1.7%, while supply is expected to trend “Pause for Safety” programs, to improve operational
throughout the year. In line with the industry, EFert
opportunities in the local agri space to improve farmer moderately higher with new capacities entering the discipline by empowering our sites to lead various
continues to withhold GIDC on all non-concessionary
productivity. EFert’s Crop Sciences Division earned a global market. International urea prices are expected initiatives. With these programs we strive to change
gases in line with the interim order of the High Court in
revenue of PKR 671 M in 2018 vs PKR 225 M last to remain soft at current levels on the back of North the mindsets and behaviors of our employees, on the
October 2016, striking down the GIDC Act. The
year. America and India slightly reducing their reliance on personal and professional front.
Company obtained a stay order against GIDC
imports. This is likely to put pressure on suppliers to
applicability on concessionary gas in 2015, and no Financial Review find other markets for their product.
GIDC is being paid or accrued for concessionary gas
supplied to the new urea plant. GIDC on Sales revenue for the Company was recorded at PKR
Promoting health & well-being low-income communities with impact investments. On December 31, 2018, the enrollment at our 13 137 students graduate and join the ranks of alumni,
The “Healthy Daharki Project” phase-2 was launched Engro Fertilizers undertakes community engagement adopted government schools stood at 1,424 students. bringing the total Alumni network to 384 individuals.
to improve lifestyles of the community, including “Bike initiatives and social investments, to combine financial Our Katcha school network continues to operate as
• Pathways to Success
to work” campaign and “Health Awareness” sessions. and managerial resources to enrich lives and pave the per plan, along with the addition of the first girls
middle school in Ghazi Chachar with support from In 2017 we implemented a ground-breaking USAID
Our HSE expertise was sought out within the Engro way for sustainable living. We channel our passion
CDP, private donors and Engro. Sahara Welfare funded Project in Karachi and Ghotki called
group and outside it. We provided HSE services to and aspirations to positively impact Pakistan with a
School also continues to deliver quality education in “Pathways to Success” focused on improving access
other subsidiaries including EMS facilitation for EPQL. focus on, but not limited to, the following:
our neighboring communities throughout the year, and opportunity of livelihood for girls.
We also conducted HAZOP Studies for Unilever sites with new rooms and playground added to the school.
in 2018. The additions helped in facilitating more students, and
• Community investment and infrastructure
development this year the total number of students jumped to 533
Our HSE Performance
from 481 in 2017.
Total Recordable Injury Rate (TRIR) 0.09 • Education
Livelihood
Loss Workday Injury (LWI) 1 • Livelihood
• Technical Training Centre (TTC), Daharki
Total Man-hours 13.2 M • Agri-Value chain projects
The Technical Training Centre (TTC), Daharki,
Fatalities 1 • Health-care services established with the help of Engro Fertilizers, serves
Recordable Injuries 4 • Energy conservation as the fulcrum of our skills training programs. The
College offers a 3-year Diploma in Associated
Our initiatives to scale HSE initiatives and welcome • Protecting the environment
Engineering (DAE) in Chemical and Mechanical
them to the digital age also continued. OPERA
• Sports promotion and development technologies, as well as short-term vocational training
Phase-2/3 for MOC and Risk Management was
Our aspirations go beyond corporate philanthropy programs for the youth living in the Daharki vicinity.
developed and launched successfully.
and we aim to build a sustainable inclusive business Over the years, we have helped the College develop During 2018, this project completed major targets
We ensure that all employees in plant operations at all and deploy a placement software, which will act as a including training 1500+ adolescent girls in LSBE (Life
strategy.
our manufacturing facilities are provided an outline of student databank and will be used for tracking alumni Skills Based Education) from government schools in
the process and operating procedures, with an Community Investment and Infrastructure employment for impact evaluation and governance of Karachi and Ghotki. Additionally, business startup
emphasis on specific HSE hazards, emergency Development the College. In addition, a manpower recruitment toolkits were distributed to 39 young entrepreneurs in
operations and safe work practices. The Occupational A key component of our social investment strategy is study was conducted for the TTC, which identified Ghotki, along with mentorship and facilitating market
Health Program at the company includes aspects of community engagement and infrastructural employment opportunities for TTC graduates linkages.
industrial hygiene and occupational medicine. In development to uplift quality of life. Incorporating the overseas. For vocational training courses, a
addition, all employees are trained and kept abreast partnership with USAID worth PKR 7 million was To inculcate and facilitate a learning environment for
needs and values of people living in our target
of technological changes and safety-related aspects secured to train youth to become carpenters, welders, young girls, Faiz Library was established at Sahara
communities in policy development and planning,
of their jobs. and general electricians. Welfare School, which continues to host 20+ girls from
decision-making, service delivery and assessment is
nearby villages for book club and mentorship
CORPORATE SOCIAL RESPONSIBILITY at the heart of our smart and sustainable social
sessions.
interventions. Throughout the year, we invested in
Engro Fertilizers believes that a robust and Agri. Value Chain Projects
capacity building in the areas of livelihood, education
prosperous society is imperative for the growth of
and infrastructure development in and around • Partnerships and Value Expansion (PAVE) for
business, such that our growth as an organization is
Daharki. Our interventions included renovation of inclusive seed systems
intertwined with the development of society. Built on
educational facilities, upgrading of community
an inclusive growth philosophy, we prosper when PAVE Pakistan is a two-year business inclusive project
physical infrastructure, provision of income generation
Pakistan prospers as a whole. The Company targets jointly funded by DFAT (Department of Foreign Affairs
opportunities, and provision of basic health treatment
impoverished, bottom-of-the-pyramid communities and Trade) Australia and Engro Fertilizers Limited,
through medical care centers.
around our business operations to raise their which aims to develop the seed value chain of rice,
economic conditions, thereby making our value During the year, the RO plant at Jan Mohammad wheat and vegetables in Pakistan, making it more
chains stronger and sustainable. Bugio was successfully converted to solar power, inclusive to smallholder farmers by building their
ensuring clean water availability while conserving capacities and creating market linkages for them.
Social purpose is integrated into Engro Fertilizers’
energy. Additionally, a sewerage line was laid down in
business model. We passionately believe in “shared
Jung in the Christaintian, Patafi and Burrerio Mohalas,
value” where benefits extend beyond employees and
while the railway station at Daharki was upgraded to
shareholders to communities in our areas of business
improve service levels.
and the nation at large. We invest in sustainable Around 540 trainees were enrolled in TTC in 2018. The
initiatives that impact lives and result in enduring Education number of graduates were 380, swelling the TTC
economic change. We hold ourselves accountable for Education has always been one of our core focus alumni pool to 2,478 graduates till date. Around 240
the impact of our business decisions and take areas for social investments. Education is a basic new trainees were inducted to equip them with
ownership of the welfare and development of the human right and the foundation on which a life of employment and entrepreneurial skills and empower
communities with whom we engage. We aspire to opportunity and an escape from poverty is built. Since them to become valuable and contributing members
exceed the expectations of business goals and our inception, we have worked passionately to provide of the community.
endeavor to fulfil sustainable social goals. This vision education to the underprivileged communities around The strength of the Diploma (DAE) program stands at
is demonstrated by our CSR wing – Engro Foundation our manufacturing facility, while improving quality and 407 students in 2018. Of these, 112 students were
– which strives to improve the lives of people living in learning outcomes at all levels. new inductees, while we were privileged to witness
Smallholder farmers in this project will benefit primarily In line with the action plan, Engro Fertilizers international kabaddi players participated in the The year 2018 was declared as the “Year of Learning”
through increased income gained from producing and successfully met its Carbon Footprint reduction target league and it was widely covered by national TV for Engro Fertilizers, reinforcing our focus on human
selling certified seed, which can be sold at a higher for 2017. channel as well as on social media. capital development through a series of meticulously
price than regular crops. The enrolled farmers will also planned initiatives and activities.
• One Million Tree Project PROMOTING UN GLOBAL COMPACT (UNGC)
benefit from knowledge of new farming practices, The following is HR’s contribution to drive Engro
Engro Fertilizers initiated a landmark project of One PRINCIPLES AND SUSTAINABLE DEVELOPMENT
including HSE awareness and marketing techniques. Fertilizers’ success in the market.
Million Trees in 2018, and an MoU was signed with GOALS (SDGs)
During the year, 4,425 (including 604 female) Maintaining focus on gauging the true pulse of the
Sindh Forest Department. The goal of the project is to The PAVE Project by Engro Fertilizers was one of the
beneficiaries have been engaged in the project. organization through:
contribute constructively to efforts to reverse main initiatives in the United Nations Global Compact
• Project Humqadam environmental degradation, restore biodiversity, Business Sustainability Award won by our parent • Enhanced engagement of HR at all levels of the
Humqadam is an initiative to help subsistence level reduce carbon footprints and promote a healthy company, Engro Corporation, in the Large National organization
farmers (with land size of less than 12.5 acres) by environment for the community. Companies category for its consistent and sustainable
• Identification and addressing employee concerns
providing them with interest-free loans (in-kind) for As per the One Million Tree project, the extension of efforts in 2018. The PAVE Project is directly aligned to foster trust in organizational development
crop input, and other agri services. This will also help “Sarhad” and “Meer Pur Mathelo” deserts has been with the following Sustainable Development Goals systems and processes
us connect with the farmers at the grass root level. completed by 100 acres as part of Phase-1. For (SDGs): Goal 2: Zero Hunger, Goal 5: Gender
Equality, Goal 8: Decent Work and Economic Growth, Talent Management
Phase-2, land preparations are being undertaken
across 200 acres. Goal 12: Responsible Production and Consumption. In To seamlessly enable organizational sustainability and
addition to these, all other initiatives undertaken by the continuity through:
A massive tree plantation in our colony and Company are geared at promoting all the SDGs,
surroundings was also part of the project. Engro • Structured skill development opportunities
particularly the following: Goal 1: No Poverty, Goal 3: covered in the Transitional Training Model
Fertilizers has successfully planted 500,000 trees in Good Health and Well-being, Goal 6: Clean Water and (Technical + Management Skills Interventions)
Phase-I of the plantation drive. Sanitation, Goal 9: Industry, Innovation and
Infrastructure, Goal 10: Reduced Inequalities. • Effective succession and career planning
Sports Promotion and Development
strategy
• Annual Sports Weekend 2018 2
3
• Leadership Pipeline Development Framework
GOOD HEA
LT
ZERO & WELL-BE H
Engro Fertilizers held Sports Weekend 2018, to which HUN
GER ING
• A new Mentorship Program, with a
all participating employees of Engro Fertilizers, 1
RT
Y comprehensive monitoring and execution
VE
The company launched the project in the current Rabi including senior management and players from other PO
Q
4
mechanism
NO ED UALI
Wheat cycle in 4 districts, where interest free loans UC TY
AT
• Continuous focus on de-clogging talent pipeline
5 ER Y
GE UA
ION
were provided to 205 farmers.
EQ
ND LIT
to ensure organizational health
Healthcare Services
Talent Acquisition
AL E S
GO R TH HIP
PAR 17
FO NERS
Our health projects continued to provide essential
CLE NITATI
To proactively create a candidate pipeline by
&S
services. The Sahara Clinic treated a total of 9,528
AN
A
6
continuously attracting talent and reducing
WAT
patients, while the singular snake-bite treatment recruitment lead time through:
AND ST STICE
ER
ON
INSTITU RONG
TIONS
facility treated a total of 7,998 patients. More than 350
16
JU
• A new recruitment and induction process
PEACE,
awareness sessions were held for Hepatitis
AFFORDABLE
awareness, attended by 9,860 participants. A total of • Review of new HR ISO standards to assess EFert
& CLEAN
ENERGY
7
8,441 people were vaccinated, while 143 HC patients HR’s alignment
N LAND
were treated and cured during the year.
• Deep dive data analysis of attrition to identify
15
LIFE O
Energy Conservation areas of improvement
DEC
&
GRO NOMI RK
Reduction in consumption of energy resources is of • Creation of a conducive environment by
EC
ENT
OW
O WO
WT C
E B ER
topmost priority at EFert. The Company continuously Engro subsidiaries, were invited. The Sports Weekend developing a diverse talent pool including PWDs,
EL
LIF WAT
8
14
seeks to undertake measures to conserve energy, kicked off with an awe-inspiring opening ceremony, gender diversity and sensitizing our hiring
besides regularly conducting energy conservation followed by competitive indoor and outdoor games practices
IN NN DU
FRA OV ST
I IN
N
such as cricket, football, volleyball, chess, tennis,
ST AT
TIO TE
awareness drives at Head Office and plant sites • Developing an external talent pool
RU
AC IMA C
L IO TUR
table tennis etc.
C 3
1 RY N & E
Further, as part of our commitment to conserve
9
HR Services & Operational Excellence
COMMUNITIES .
CITIES &
energy, we have successfully sustained “Green • Sponsorship of Quetta Gladiators-Pakistan

SUSTAINABLE INE
To facilitate process efficiency, attain internal

N Q
CTIO N RE UALIT
Super League
11
Office” certifications awarded by WWF for our Head
ODU O DU IE
& PR UMPTI E CED S
customer satisfaction and enable a high-performance
S L
CON ONSIB
Office, all zonal offices and Zarkhez Plant.

RESP
10
Engro Fertilizers as part of Engro group, was one of 12
culture by:
Protecting the Environment the sponsors of Quetta Gladiator team in PSL 2018,
• Formulating KPIs for HR to develope a customer
and is also the sponsor for 2019 season.
• Carbon Footprint reduction OUR COMMITMENT TO OUR PEOPLE service orientation
• Franchise owner of ‘Karachi Zorawars’ in Super
Engro Fertilizers undertook a carbon footprint One of the core drivers of organizational growth are its • Analyzing all HR processes to weed out
Kabaddi League inefficiencies
quantification, verification & benchmarking exercise of people. Engro Fertilizers’ HR strives to uphold this
international standards in 2017, and has developed Engro Fertilizers participated in Pakistan’s first ever philosophy to achieve organizational excellence by At Engro Fertilizers, we are cognizant of the dynamic
an action plan to bring the Company in line with International Super Kabaddi League held in 2018, as acquiring, developing, managing and retaining talent operating environment we operate in. Based on this
globally acceptable levels for a Fertilizer complex. team franchise owners of “Karachi Zorawars”. Major to build organizational capability. insight, we have consistently leveraged use of ICT to
improve accessibility of HR related information across At EFert, we believe in safeguarding the interests of manuals. The Board establishes corporate strategy DC Pension Fund: PKR 719 million (EFert’s share:
our target audience. New and improved systems have our farmers through adequate consumer protection and the Company's business objectives. Divisional ~PKR 474 million)
been implemented across HR to provide better and measures such as: management integrates these objectives into DB Pension Fund: PKR 40 million (All EFert)
faster solutions. • Providing retail price list to all dealers to ensure divisional business strategies with supporting financial
objectives. DC Gratuity Fund: PKR 1,564 million (EFert’s share:
Gender Diversity farmers are not exploited ~PKR 719 million)
• Review:
The Company is committed to promoting diversity in • Providing education and guidance to farmers DB NMPT Gratuity Fund: PKR 164 million (All EFert)
the workplace by providing equal opportunities to all, regarding the best usage of fertilizer, The Board meets every quarter to consider the
based on merit and suitability. Currently, females recommended nutrition mix and better use of Company‘s financial performance, financial and DB MPT Gratuity Fund: PKR 244 million (EFert’s share:
comprise 8% of the middle and senior management other inputs to enhance the yield operating budgets and forecasts, business growth ~PKR 159 million)
and with the increased focus, there is a determination • Providing education to farmers on improving the and development plans, capital expenditure AUDITORS
to increase this number in the coming years. soil health proposals and other key performance indicators.
The existing auditors, A.F. Ferguson & Co., Chartered
Employment of Special Persons The Board Audit Committee receives reports on the Accountants retire and being eligible, have offered
• Free soil sampling services are provided to
system of internal financial controls from the external themselves for re-appointment. The Board Audit
Employment of Special Persons was an objective of farmers across Pakistan (approximately 24,000
and internal auditors and reviews the process for Committee recommends their appointment as auditors
the Company and HR for 2018 to ensure inclusivity soil tests are conducted annually)
monitoring the effectiveness of internal controls. There for the year ending December 31, 2019
within the corporate world. A specific focus towards • Ensure timely delivery of product through our is a company-wide policy governing appraisal and
hiring special persons was maintained, through extensive distribution and dealer network PATTERN OF SHAREHOLDING
approval of investment expenditure and asset
specific induction drives which resulted in successful
CONTRIBUTION TO NATIONAL EXCHEQUER disposals. Once projects are completed, reviews are Major shareholding of Engro Fertilizers Limited is with
hiring.
performed on all material investment expenditure. Engro Corporation. A statement of the general pattern
Communications During the year 2018, Engro Fertilizers contributed
DIRECTORS’ REMUNERATION of shareholding along with statement of purchase and
over Rs 19.5 billion (2017: Rs 18.7 billion) towards the
• CEO sessions with employees were held during sale of shares by Directors, Executives and their
national exchequer by way of Government taxes, The Board of Directors has duly approved the spouses and minor children, during 2018 is shown
the year to keep them aware of the strategic duties and levies remuneration of the members of the Board for later in this report.
direction of the Company
Further, value addition in terms of savings in foreign attending meetings of the Board and its committees.
• Half-yearly magazines were published and STATEMENT OF DIRECTORS’ RESPONSIBILITIES
exchange amounted to approximately USD 581 million The remuneration is determined with the level of
distributed to all employees to bridge through import substitution of 1,986 KT of urea The Directors confirm the compliance with Corporate
responsibility and expertise, to attract and retain the
communication amongst all facets manufactured and sold in the country by Engro and Financial Reporting Framework of the Securities
best talent while ensuring that their independence is
• EFert has used Facebook Workplace to reiterate Fertilizers in 2018. not compromised in any manner. and Exchange Commission of Pakistan and Code of
the values of the Company among the employees Corporate Governance for the following matters:
STATEMENT OF CHARITY ACCOUNT DIVIDENDS AND APPROPRIATIONS
Industrial Relations 1. The financial statements, prepared by the
PKR in million 2018 2017 Profit after tax distribution is as under: Management of the Company, present fairly its
Engro Fertilizers Limited appreciates employee rights, Community Welfare & Infrastructure 47 47 state of affairs, the result of its operations, cash
2018
including those of Collective Bargaining Agent, flows and changes in equity.
besides providing special incentives to maintain Education 29 23 PKR in ‘000
industrial peace through avoidance of labor disputes General 11 9 2. The Company has maintained proper books of
and operating disruptions. In addition, many Profit after tax 17,413,518 accounts.
Healthcare 6 4
opportunities are provided to these employees 3. Appropriate accounting policies have been
through social and professional events to engage and Environment 7 - Dividends:
consistently applied in preparation of the
enhance their skills and performance. Grand Total 100 83 - Final 2017: PKR 3.00 per share (4,005,898) financial statements. Accounting estimates are
BUSINESS ETHICS & ANTI-CORRUPTION - 1st interim 2018: PKR 4.00 per share (5,341,198) based on reasonable prudent judgment.
MEASURES INTERNAL CONTROL FRAMEWORK
- 2nd interim 2018: PKR 4.00 per share (5,341,198) 4. International Financial Reporting Standards, as
Engro ensures compliance with all regulatory and • Responsibility: applicable in Pakistan, have been duly followed
(14,688,294) in preparation of the financial statements.
governance requirements while conducting its The Board is ultimately responsible for the Company’s
business and has formulated various policies and systems of internal control and for reviewing its Balance transferred to Retained Earnings 2,725,224
5. The system of internal control is sound in design
standards which are continuously monitored with the effectiveness. However, such a system is designed to and has been effectively implemented and
help of specific committees. Such policies include: manage rather than eliminate the risk of failure to PENSION, GRATUITY AND PROVIDENT FUND monitored.
• Code of Conduct achieve business objectives, and can provide only
The employees of the Company participate in 6. There is no doubt about the Company's ability to
reasonable rather than absolute assurance against
• Fraud Risk Management- (During 2018, EFert Retirement Funds maintained by Engro Corporation continue as a going concern.
material misstatement or loss. The Board, whilst
conducted Fraud Risk Management workshops (the Parent Company). The Company contributes to
maintaining its overall responsibility for managing risk 7. There has been no material departure from the
for its employees) plans that provide post-employment and retirement
within the Company, has delegated the detailed best practices of Corporate Governance, as
benefits for its employees. These include DC
• Governance of Conflicts of Interest design and operation of the system of internal controls detailed in the Regulations of Rule Book of
provident fund, DC gratuity plan and DB gratuity
to the Chief Executive. Pakistan Stock Exchange.
• Statement of Ethics and Business Practices plans. The value of net assets of Provident Fund (as at
• Framework: June 30, 2018), Gratuity funds (as at December 31, 8. One of the Directors has attended Directors’
• Whistleblower Policy 2017) and Pension Funds (as at December 31, 2017) Training program during the year. All the other
The Company maintains an established control
• Governance of transactions/contracts with based on their respective audited accounts (except Directors have already completed this program in
framework comprising of clear structures, authority
related parties Provident Fund) are; previous years.
limits, and accountabilities, well understood policies
CONSUMER PROTECTION MEASURES and procedures and budgeting for review processes. Provident Fund: PKR 3,876 million (EFert’s share:
All policies and control procedures are documented in ~PKR 1,861 million)
BOARD COMPOSITION AND ATTENDANCE
The total number of directors are eight as per the following:
forward-looking statement
a. Male: Seven 2018 has been a year of record profitability for the Engro Fertilizers and the company plans to build upon the
b. Female: One exemplary performance showcased by its business units. The Company will continue to leverage its strong
brand name to enhance its foot print in the agriculture arena and aims to continue playing its part in
guaranteeing food security for the Country .
In 2018, the Board of Directors held 6 meetings to cover its complete cycle of activities.
The attendance record of the Directors is as follows: Engro Fertilizers, keeping in mind the need of the Country, has planned on undertaking reliability
expenditures which should ensure maximum utilization of its production facilities. Engro Fertilizers will
continue to play its role in providing Agri-inputs to farmers at optimal prices while also providing for valuable
Ghias Khan Non-Executive Director-Chairman 6/6
import substitution. The Company will be looking forward to continued support from the Government in
Ruhail Mohammed Executive Director 6/6 relation to availability of gas and its pricing.
Javed Akbar Independent Director 6/6 Engro Fertilizers is continuously exploring avenues to maximize its product portfolio, both in the
manufacturing and the trading divisions to enrich availability of resources to the farmer. Engro Fertilizers is
Abdul Samad Dawood Non-Executive Director 5/6
also aiming at introducing high tech farm equipment to the average farmer in the country to ensure more
Asad Said Jafar Independent Director 6/6 optimal use of resources to enhance the local agriculture yields. Simultaneously, the Company has also
launched various initiatives at the ground level to guide the farmer to assist bridging the severe yield gap
Sadia Khan Independent Director 4/6 which exists in Pakistan.
Asim Murtaza Khan Independent Director 6/6
The Company expects stable Urea demand in the coming year, supported by positive farmer sentiments.
Nadir Salar Qureshi Executive Director 5/6 However, demand for Phosphates is likely to decline due to escalation in prices and higher channel
inventory. The Company has been benefiting from growth in its other businesses, namely the Specialty
Fertilizer Business as well as the Crop Sciences Division, and expects them to continue to progress.
BCC COMPOSITION AND ATTENDANCE
Engro Fertilizers remains wary of the gas situation in the Country and has been taking measures to efficiently
In 2018, the Board Compensation Committee held 2 meetings to cover its complete cycle of activities.The use its allocated share. However, any disruption in availability of gas and its distribution will pose a threat to
attendance record of the Directors is as follows: Company’s profitability. Furthermore, erratic movement in PKR/ USD parity poses a threat to Company’s
gross margins due to its impact on the traded products as well as the dollar linked gas. Whereas, various
Javed Akbar-Chairman 2/2 government measures including application of GIDC and super tax are likely to hurt profitability.
Ghias Khan-Member 2/2 The Company takes a holistic view while detailing out plans for the coming years, which includes studying the
Abdul Samad Dawood-Member 2/2 local as well as the global agriculture landscape. Engro Fertilizers continues to keep the wellbeing of the
farmer in mind during its planning cycle, focusing on providing the farmer with a wide portfolio of solutions at
optimal prices. Assumptions used and forecasts made are by inhouse Company resources, valuable inputs
BAC COMPOSITION AND ATTENDANCE from whom were taken based on their specialized experiences and thus no external advise was sought for
the purpose.
In 2018, the Board Audit Committee held 4 meetings to cover its complete cycle of activities. The attendance
record of the Directors is as follows:
Asad Said Jaffar-Chairman 3/4
Javed Akbar-Member 4/4
Sadia Khan-Member 2/4

quarterly analysis
Profit After Tax (Rupees in million)
(Rupees in million) 6,000
5,100 5,164
Description Q1 Q2 Q3 Q4 FY 2018
5,000
Net sales 18,219 22,898 28,099 39,981 109,197
3,890
Cost of sales (10,888) (16,208) (18,223) (28,561) (73,880) 4,000
Gross profit 7,331 6,690 9,876 11,420 35,317 3,260
Selling and distribution expenses (1,665) (1,606) (1,975) (2,762) (8,008) 3,000
Administrative expenses (296) (217) (299) (773) (1,585)

2,000
Other income 1,145 509 214 194 2,062
Other operating expenses (404) (169) (453) (406) (1,432) 1,000
Finance cost (524) (362) (534) (651) (2,071)
Profit before tax 5,587 4,845 6,829 7,022 24,283
Q1 Q2 Q3 Q4
Tax (1,697) (1,585) (1,729) (1,857) (6,869)
Profit after tax 3,890 3,260 5,100 5,164 17,414
Earnings / Dividends Per Share
Quarter Wise Sales Volumes (KT)

EPS DPS
900 4.50 4 4
3.82 3.87
65 4.00
800
700 64 3.50 3*
2.91
37 299 3.00
600 44 153 2.44
55 120
500 2.50
400 2.00
300 1.50
497 496 503 490
200 1.00
100 0.50 Nil
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
*Final dividend for the year ended December 31, 2018 recommended for approval of members at the Annual General Meeting.
Urea Phosphates Speciality Fertilizer
QUARTER 1 Sales Revenue The Company’s Specialty fertilizer sales clocked in at Cost of Sales and Other Operational Costs
Production 65 KT increasing by 64% from SPLY, mainly due to
Urea sales stood at 496 KT, declining by 5% from better potash avails and application of potash on Gross profit margins remained in line with SPLY.
The Company’s urea production in 1Q 2018 stood at SPLY mainly due to increase in urea prices post non-conventional crops.
517KT as compared to 447KT same period last year elimination of subsidy in Q2 2018. Selling costs increased by 18% from SPLY due to
(SPLY), an increase of 16% YoY due to plant Phosphates sales during Q2 2018 stood at 120 KT vs Net revenue of the Company increased by 33% from increase in volumes offset by savings of reduced
shutdown in 1Q last year. 58 KT SPLY, a whooping increase of 107% YoY. SPLY mainly due to increase in volumes and price stock levels.
Higher sales were due to (i) constant efforts to increase of urea and DAP.
Sales Revenue improve channel management, product quality and Finance Cost
consistency (ii) pre-buying because of rising interna- Cost of Sales and Other Operational Costs
Urea sales during the period clocked in at 497KT tional prices, and (iii) coupon-based subsidy (direct to Finance cost remained in line with SPLY.
compared to 269KT in 1Q 2017, an increase of 85% farmer) in Punjab. Gross profit margin stood at 35% for Q3 2018 Vs 29%
YoY because of overall increase in urea market and in SPLY, mainly due to better prices of DAP and urea Profit
lower industry avails vs 1Q 2017. The Company’s Specialty fertilizer sales clocked in at vs. SPLY.
37KT increasing by 12% from SPLY, mainly due to Company's Net profit for Quarter stood at PKR 5.2 B
Phosphate sales during 1Q 2018 stood at 55 KT vs 37 better industry avails and subsidy on potash. Selling costs increased by 13% from SPLY due to increasing by 24% vs Q4 2017, mainly due to higher
KT last year, up 49% YoY. Higher sales were led by increase in average freight costs due to change in urea prices and higher phosphates offtake.
pre-buying in anticipation of rising international prices. Net revenue of the Company increased by 33% from sales region mix, offset by savings in warehousing
SPLY mainly due to increase in volumes, price cost due to significant decline in average stock levels ANALYSIS OF VARIATION IN INTERIM ACCOUNTS
The Company’s blended fertilizer (Zarkhez and Engro increase of urea post elimination of subsidy and of urea. WITH FINAL ACCOUNTS
NP) sales clocked in at 44KT in 1Q 2018 vs 31KT increase in DAP prices due to escalating international
during the same period last year, an increase of 42%, prices. Finance Cost Efert's net sales grew from PKR 18 B in Q1 to PKR 109
mainly due to industry avails. B for Full year 2018. Company’s highest quarterly
Cost of Sales and Other Operational Costs Finance cost was lower than SPLY by 23% due to sales were recorded in the last quarter mainly due to
Net revenue for the quarter stood at PKR 18 B vs PKR improved working capital and reduction in long term increase in urea prices and higher DAP offtake.
10 B SPLY mainly due to increase in volumes as Gross profit margin stood at 29% for Q2 2018, almost loans.
explained above, increase in prices of urea from in line with SPLY. Company’s Gross profit stood at PKR 7.3 B in Q1
average of PKR 1,270/bag in Q1 2017 to PKR Profit 2018, which increased to PKR 35 B for Full year 2018.
1,370/bag in Q1 2018 and increase in prices of DAP Selling costs declined by 14% from SPLY despite Company’s highest quarterly gross profit was record-
due to rising exchange rate. increase in sales revenue, mainly due to savings in Company's net profit stood at PKR 5 B for Q3 2018 vs ed in Q4 2018 of PKR 11.4 B, mainly due to increase
freight cost caused by change in sales region mix. PKR 2.8 B in Q3 2017. Higher profitability was led by in urea prices from October 2018 and increase in
Cost of Sales and Other Operational Costs higher urea and Phosphates offtake and higher phosphate sales.
Finance Cost domestic prices.
Gross profit margin stood at 40% in Q1 2018 vs 35% Gross profit margin of the company reduced from
in Q1 2017, mainly due to better prices of urea vs Finance cost was significantly lower from SPLY mainly QUARTER 4 40% in Q1 to 32% for FY 2018, due to increase in cost
SPLY. due to improved working capital. of sales associated with increase in sales volume of
Production phosphates Vs Q1, which has lower margins as
Selling expenses increased by 29% from in Q1 2017 Profit compared to Urea, and increase in crude oil prices
mainly due increase in sales volume. Company's Urea production stood at 500 KT vs 407 resulting in overall increase in gas cost throughout the
Company's Net profit stood at PKR 3.2 B increasing KT in SPLY, an increase of 23%, mainly due to higher year.
Finance Cost by 32% from SPLY. Higher profitability vs SPLY was production days in Q4 2018 vs Q4 2017.
mainly due to one-off tax effects arising out of the Net profit for the company increased from PKR 3.9 B
Finance cost was lower at PKR 524 M (vs PKR 687 M Budget announcement of reducing tax rate from 30% Sales Revenue in Q1 2018 to PKR 17.4 B for FY 2018, on back of
last year) as a result of improved working capital, in phases to 25% and increase in volumes and prices increased revenue caused by higher urea prices,
lower benchmark interest rates and re-pricing of of phosphates. Urea sales during the period declined to 490 KT in Q4 increase in phosphates sales, and higher inventory
various long-term loans. 2018 vs 508 KT in Q4 2017, mainly due to increase in holding gains caused by increasing international
QUARTER 3 urea prices post increase in gas prices by OGRA. prices of phosphates and other trading products.
Profit
Production Phosphates sales stood at 299 KT in Q4 2018 increas- Overall the net profit margin decreased from 21% in
Company’s consolidated profit for the quarter stood at ing by 12% from SPLY due to better penetration in Q1 2018 to 16% for FY 2018, mainly due to decline in
PKR 3.9 B vs. PKR 1.6 B in the corresponding period The Company’s urea production in Q3 2018 stood at Punjab and improvement in product quality and gross profit margins as explained above.
last year. Higher profitability was led by higher urea 497 KT increasing by 9% from SPLY, mainly due to consistency.
offtake and higher domestic prices. higher production days in Q3 2018. The Company’s Specialty fertilizer sales clocked in at
65 KT increasing by 48% from SPLY, mainly due to
QUARTER 2 Sales Revenue better market penetration.
Production Urea sales during the period clocked in at 503 KT an Net revenue of the Company increased by 40% from
increase of 15% from SPLY, mainly due to higher SPLY, mainly due to increase urea and DAP prices
Company’s urea production in Q2 2018 stood at 414 production days leading to better avails. and increase in volumes of phosphates and other
KT a decline 17% from SPLY and mainly due to a trading products.
plant turnaround in 2Q 2018. Phosphate sales during Q3 2018 stood at 153 KT Vs
139 KT in SPLY, due to better product availability.
horizontal analysis
Consolidated Statement of Financial Position
(Amounts in millions) 2018 18 Vs. 17 2017 17 Vs. 16 2016 16 Vs. 15 2015 15 Vs. 14 2014 14 Vs. 13 2013 13 Vs. 12 2012
Rs. % Rs. % Rs. % Rs. % Rs. % Rs. % Rs.
EQUITY AND LIABILITIES
EQUITY
Share capital 13,353 - 13,353 0.3 13,309 - 13,309 1.0 13,183 7.8 12,228 14.0 10,728
Share premium 3,385 - 3,385 8.1 3,132 - 3,132 38.5 2,261 20,454.5 11 - 11
Advance against issue of shares - - - - - - - - - (100.0) 2,119 100.0 -
Exchange revaluation reserves 409 392.8 83 654.5 11 (21.4) 14 100.0 - - - - -
Hedging reserve - - - - - (100.0) (4) (89.7) (39) (73.6) (148) (54.4) (324)
Remeasurement of post employment benefits (45) (4.3) (47) 74.1 (27) (32.5) (40) 185.7 (14) (33.0) (21) 100.0 -
Unappropraited profits 28,421 10.6 25,696 1.9 25,223 (2.7) 25,921 35.8 19,088 75.4 10,880 102.1 5,383
45,523 7.2 42,470 2.0 41,648 (1.6) 42,332 22.8 34,479 37.5 25,069 58.7 15,798
NON-CURRENT LIABILITIES
Borrowing 25,715 12.9 22,784 (22.5) 29,380 16.2 25,290 (29.9) 36,091 (31.8) 52,896 9.1 48,482
Working capital loan from Holding Company - - - - - - - - - (100.0) 3,000 - 3,000
Derivative financial instruments - - - - - - - (100.0) 7 (99.5) 1,531 207.5 498
Deferred liabilities 7,161 (24.2) 9,454 25.0 7,561 26.8 5,960 14 5,227 12.3 4,655 37.7 3,381
Service benefit obligations 193 10.3 175 11.5 157 25.6 125 10.6 113 8.6 104 5.1 99
33,069 2.0 32,413 (12.6) 37,098 18.2 31,375 (24.3) 41,438 (33.4) 62,186 12.1 55,460
CURRENT LIABILITIES
Trade and other payables 29,072 32.3 21,966 46.7 14,969 (15.4) 17,702 (28.4) 24,727 37.3 18,012 126.3 7,960
Accrued interest / mark-up 426 (28.4) 595 1.9 584 (31.5) 852 (37.4) 1,362 (8.0) 1,480 (17.2) 1,788
Taxes payable 3,408 273.3 913 (17.3) 1,104 (57.4) 2,593 283.6 676 100.0 - - -
Current portion of
- Borrowings 5,096 (37.2) 8,120 57.0 5,172 (51.8) 10,737 35.7 7,913 170.6 2,924 (80.4) 14,896
- Retirement and other service benefits obligations 51 2.0 50 2.0 49 2.1 48 11.6 43 (2.0) 44 9.7 40
Short-term borrowings 1,010 (80.8) 5,264 175.6 1,910 2,446.7 75 100.0 - - - (100.0) 1,000
Unclaimed dividend 66 164.0 25 25.0 20 233.3 6 100.0 - - - - -
Derivative financial instruments - - - (100.0) 250 (31.7) 366 (66.4) 1,090 411.6 213 (62.4) 566
39,129 5.9 36,933 53.5 24,058 (25.7) 32,379 (9.6) 35,811 57.9 22,673 (13.6) 26,250
TOTAL EQUITY AND LIABILITIES 117,721 5.3 111,816 8.8 102,804 (3.1) 106,086 (5.0) 111,728 1.6 109,928 12.7 97,508
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 68,204 (1.0) 68,923 (1.8) 70,168 (2.8) 72,199 (3.7) 74,963 (5.5) 79,315 (4.3) 82,878
Intangible assets 4,488 0.3 4,475 0.5 4,451 (0.2) 4,462 3,681.4 118 (14.8) 138 (14.5) 162
Deferred taxation - - - - - (100.0) 73 100.0 - - - - -
Long term loans and advances 142 5.2 135 11.6 121 (24.4) 160 70.2 94 (14.0) 109 30.2 84
72,834 (1.0) 73,533 (1.6) 74,740 (2.8) 76,894 2.3 75,175 (5.5) 79,562 (4.3) 83,124
CURRENT ASSETS
Store, spares and loose tools 5,325 0.9 5,280 8.0 4,887 5.3 4,639 (1.6) 4,714 7.9 4,369 6.4 4,107
Stock-in-trade 11,538 51.1 7,636 12.3 6,799 (3.3) 7,029 538.4 1,101 (20.3) 1,382 (18.1) 1,687
Trade debts 9,110 68.1 5,419 (28.6) 7,585 235.3 2,262 198.8 757 (0.2) 758 (27.5) 1,046
Derivative financial instruments - - - - - (100.0) 29 100.0 - (100.0) 130 12,920.7 1
Loans, advances, deposits and prepayments 1,363 17.8 1,157 69.4 683 14.8 595 37.4 433 (30.8) 626 58.4 395
Other receivables 9,044 2.7 8,807 26.1 6,986 414.1 1,359 7,052.6 19 (32.6) 28 (56.0) 64
Taxes recoverable - - - - - (100.0) 705 100.0 - (100.0) 557 (72.1) 2,000
Accrued income 37 48.0 25 100 - - - - - - - - -
Short-term Investments 7,740 (5.2) 8,163 684.9 1,040 (91.1) 11,650 (53.6) 25,086 38.9 18,058 585.3 2,635
Cash and bank balances 730 (59.4) 1,796 2,038.1 84 (90.9) 924 (79.2) 4,443 (0.3) 4,458 82.0 2,449
44,887 17.3 38,283 36.4 28,064 (3.9) 29,192 (20.1) 36,553 20.4 30,366 111.1 14,384
TOTAL ASSETS 117,721 5.3 111,816 8.8 102,804 (3.1) 106,086 (5.0) 111,728 1.6 109,928 12.7 97,508
vertical analysis
Consolidated Statement of Financial Position
(Amounts in millions)
2018 2017 2016 2015 2014 2013
Rs. % Rs. % Rs. % Rs. % Rs. % Rs. %
EQUITY AND LIABILITIES
EQUITY
Share capital 13,353 11.3 13,353 11.9 13,309 12.9 13,309 12.5 13,183 11.8 12,228 11.1
Share premium 3,385 2.9 3,385 3.0 3,132 3.0 3,132 3.0 2,261 2.0 11 0.0
Advance against issue of shares - - - - - - - - - - 2,119 1.9
Exchange revaluation reserves 409 0.3 83 0.1 11 0.0 14 0.0 - - - -
Hedging reserve - - - - - - (4) (0.0) (39) (0.0) (148) (0.1)
Remeasurement of post employment benefits (45) (0.0) (47) (0.0) (27) (0.0) (40) (0.0) (14) (0.0) (21) (0.0)
Unappropraited profits 28,421 24.1 25,696 23.0 25,223 24.5 25,921 24.4 19,088 17.1 10,880 9.9
45,523 38.7 42,470 38.0 41,648 40.5 42,332 39.9 34,479 30.9 25,069 22.8
NON-CURRENT LIABILITIES
Borrowing 25,715 21.8 22,784 20.4 29,380 28.6 25,290 23.8 36,091 32.4 52,896 48.1
Working capital loan from Holding Company - - - - - - - - - - 3,000 2.7
Derivative financial instruments - - - - - - - - 7 0.0 1,531 1.4
Deferred liabilities 7,161 6.1 9,454 8.5 7,561 7.4 5,960 5.6 5,227 4.7 4,655 4.2
Service benefit obligations 193 0.2 175 0.2 157 0.2 125 0.1 113 0.1 104 0.1
33,069 28.1 32,413 29.0 37,098 36.1 31,375 29.6 41,438 37.2 62,186 56.6
CURRENT LIABILITIES
Trade and other payables 29,072 24.7 21,966 19.6 14,969 14.6 17,702 16.7 24,727 22.1 18,012 16.4
Accrued interest / mark-up 426 0.4 595 0.5 584 0.6 852 0.8 1,362 1.2 1,480 1.3
Taxes payable 3,408 2.9 913 0.8 1,104 1.1 2,593 2.4 676 0.6 - -
Current portion of
- Borrowings 5,096 4.3 8,120 7.3 5,172 5.0 10,737 10.1 7,913 7.1 2,924 2.7
- Retirement and other service benefits obligations 51 0.0 50 0.0 49 0.0 48 0.0 43 0.0 44 0.0
Short-term borrowings 1,010 0.9 5,264 4.7 1,910 1.9 75 0.1 - - - -
Unclaimed dividend 66 0.1 25 0.0 20 0.0 6 0.0 - - - -
Derivative financial instruments - - - - 250 0.2 366 0.3 1,090 1.0 213 0.2
39,129 33.2 36,933 33.0 24,058 23.4 32,379 30.5 35,811 32.1 22,673 20.6
TOTAL EQUITY AND LIABILITIES 117,721 100.0 111,816 100.0 102,804 100.0 106,086 100.0 111,728 100.0 109,928 100.0
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 68,204 57.9 68,923 61.6 70,168 68.3 72,199 68.1 74,963 67.2 79,315 72.2
Intangible assets 4,488 3.8 4,475 4.0 4,451 4.3 4,462 4.2 118 0.1 138 0.1
Deferred taxation - - - - - - 73 0.1 - - - -
Long term loans and advances 142 0.1 135 0.1 121 0.1 160 0.2 94 0.1 109 0.1
72,834 61.9 73,533 65.8 74,740 72.7 76,894 72.5 75,175 67.4 79,562 72.4
CURRENT ASSETS
Store, spares and loose tools 5,325 4.5 5,280 4.7 4,887 4.8 4,639 4.4 4,714 4.2 4,369 4.0
Stock-in-trade 11,538 9.8 7,636 6.8 6,799 6.6 7,029 6.6 1,101 1.0 1,382 1.3
Trade debts 9,110 7.7 5,419 4.8 7,585 7.4 2,262 2.1 757 0.7 758 0.7
Derivative financial instruments - - - - - - 29 0.0 - - 130 0.1
Loans, advances, deposits and prepayments 1,363 1.2 1,157 1.0 683 0.7 595 0.6 433 0.4 626 0.6
Other receivables 9,044 7.7 8,807 7.9 6,986 6.8 1,359 1.3 19 0.0 28 0.0
Taxes recoverable - - - - - - 705 0.7 - - 557 0.5
Accrued income 37 0.0 25 0.0 - - - - - - - -
Short-term Investments 7,740 6.6 8,163 7.3 1,040 1.0 11,650 11.0 25,086 22.5 18,058 16.4
Cash and bank balances 730 0.6 1,796 1.6 84 0.1 924 0.9 4,443 4.0 4,458 4.1
44,887 38.1 38,283 34.2 28,064 27.3 29,192 27.5 36,553 32.7 30,366 27.6
TOTAL ASSETS 117,721 100.0 111,816 100.0 102,804 100.0 106,086 100.0 111,728 100.0 109,928 100.0
horizontal and vertical analysis
Consolidated Statement of Profit or Loss
2018 18 Vs 17 2017 17 Vs 16 2016 16 Vs 15 2015 15 Vs 14 2014 14 Vs 13 2013 13 Vs 12 2012
Rs. % Rs. % Rs. % Rs. % Rs. % Rs. % Rs.
Horizontal Analysis
Sales 109,197 41.6 77,129 10.9 69,537 (18.6) 85,421 39.1 61,425 22.5 50,129 63.7 30,627
Cost of sales (73,880) 37.0 (53,911) 3.5 (52,098) (6.5) (55,724) 43.5 (38,822) 38.6 (28,008) 34.9 (20,766)
Gross profit 35,317 52.1 23,219 33.1 17,439 (41.3) 29,697 31.4 22,603 2.2 22,121 124.3 9,861
Selling and distribution expenses (8,008) 10.5 (7,245) 8.1 (6,705) 22.7 (5,466) 23.1 (4,441) 26.5 (3,511) 40.4 (2,500)
Administrative expenses (1,585) 22.5 (1,294) 42.7 (907) 1.2 (896) 16.1 (772) 28.5 (601) 3.1 (583)
Other income 2,062 (64.8) 5,866 (28.0) 8,143 85.4 4,393 79.4 2,449 121.6 1,105 191.6 379
Other operating expenses (1,432) 16.0 (1,234) 7.4 (1,149) (43.5) (2,034) 54.3 (1,318) (36.0) (2,060) 407.4 (406)
Operating profit 26,354 36.5 19,312 14.8 16,821 (34.5) 25,694 38.7 18,521 8.6 17,054 152.6 6,751
Finance cost (2,071) (21.8) (2,648) (16.9) (3,187) (31.1) (4,627) (30.2) (6,625) (23.6) (8,670) (19.0) (10,703)
Profit before taxation 24,283 45.7 16,664 22.2 13,634 (35.3) 21,067 77.1 11,896 41.9 8,384 312.1 (3,952)
Taxation (6,869) 24.7 (5,509) 26.6 (4,351) (30.4) (6,249) 69.5 (3,687) 27.7 (2,887) (383.8) 1,017
Profit after taxation 17,414 56.1 11,156 20.2 9,283 (37.4) 14,818 80.5 8,209 49.3 5,497 287.3 (2,935)
2018 2017 2016 2015 2014 2013

Rs. % Rs. % Rs. % Rs. % Rs. % Rs. %
Vertical Analysis
Sales 109,197 100 77,129 100 69,537 100 85,421 100 61,425 100 50,129 100
Cost of sales (73,880) (67.7) (53,911) (69.9) (52,098) (74.9) (55,724) (65.2) (38,822) (63.2) (28,008) (55.9)
Gross profit 35,317 32.3 23,219 30.1 17,439 25.1 29,697 34.8 22,603 36.80 22,121 44.1
Selling and distribution expenses (8,008) (7.33) (7,245) (9.4) (6,705) (9.6) (5,466) (6.4) (4,441) (7.2) (3,511) (7.0)
Administrative expenses (1,585) (1.5) (1,294) (1.7) (907) (1.3) (896) (1.0) (772) (1.3) (601) (1.2)
Other income 2,062 1.9 5,866 7.6 8,143 11.7 4,393 5.1 2,449 4.0 1,105 2.2
Other operating expenses (1,432) (1.3) (1,234) (1.6) (1,149) (1.7) (2,034) (2.4) (1,318) (2.1) (2,060) (4.1)
Operating profit 26,354 24.1 19,312 25.0 16,821 24.2 25,694 30.1 18,521 30.2 17,054 34.0
Finance cost (2,071) (1.9) (2,648) (3.4) (3,187) (4.6) (4,627) (5.4) (6,625) (10.8) (8,670) (17.3)
Profit before taxation 24,283 22.2 16,664 21.6 13,634 19.6 21,067 24.7 11,896 19.4 8,384 16.7
Taxation (6,869) (6.3) (5,509) (7.1) (4,351) (6.3) (6,249) (7.3) (3,687) (6.0) (2,887) (5.8)
Profit after taxation 17,414 15.9 11,156 14.5 9,283 13.4 14,818 17.3 8,209 13.4 5,497 11.0
summary of financial information financial ratios
2018 2017 2016 2015 2014 2013 2018 2017 2016 2015 2014 2013
Summary of Consolidated Statement of Profitability Ratios

Financial Positions Return on Equity % 38.3 26.3 22.3 35.0 23.8 21.9
Share capital 13,353 13,353 13,309 13,309 13,183 12,228 Return on Capital Employed % 23.3 14.9 12.0 18.9 10.3 6.9
Reserves 32,170 29,117 28,339 29,023 21,296 12,841 Gross Profit to Sales % 32.3 30.1 25.1 34.8 36.8 44.1
Shareholders’ funds / Equity 45,523 42,470 41,648 42,332 34,479 25,069 Net Profit to Sales % 15.9 14.5 13.4 17.3 13.4 11.0
Borrowings 30,811 30,904 34,552 36,026 44,003 55,821 Net Profit to Sales
Capital employed 76,334 73,374 76,200 78,358 78,481 80,890 (Including subsidy) % 15.8 13.6 12.0 16.8 13.4 11.0
Deferred liabilities 7,161 9,454 7,561 5,960 5,227 4,655 EBITDA Margin to Sales % 28.9 31.6 31.4 35.7 37.9 43.9
Property,plant & equipment 68,204 68,923 70,168 72,198 74,963 79,315 EBITDA Margin to Sales
Non current assets 72,834 73,533 74,740 76,894 75,175 79,563 (Including subsidy) % 28.6 29.7 28.2 34.6 37.9 43.9
Current assets 44,887 38,283 28,064 29,192 36,553 30,366 Operating leverage ratio Times 0.9 1.4 1.9 1.0 0.4 2.4
Liquidity Ratios
Current ratio Times 1.1 1.0 1.2 0.9 1.0 1.3
Summary of Consolidated Statement of Quick / Acid test ratio Times 0.7 0.7 0.7 0.5 0.9 1.1
Profit or Loss Cash and cash equivalents to
Current Liabilities % 3.1 (0.8) 0.1 35.4 15.5 99.3
Net Sales 109,197 77,129 69,537 85,421 61,425 50,129 Cash flow from Operations to Sales % 19.4 29.5 1.5 8.3 31.4 49.5
Gross profit 35,316 23,219 17,439 29,697 22,603 22,121
Operating profit 26,354 19,312 16,821 25,694 18,521 17,054 Activity / Turnover Ratios
Profit / (loss) before tax 24,283 16,664 13,634 21,067 11,896 8,384 No. of days Inventory Days 47 49 48 27 12 20
Profit / (loss) after tax 17,414 11,156 9,283 14,818 8,209 5,497 Inventory turnover Times 7.7 7.5 7.5 13.7 31.3 18.3
EBITDA 31,548 24,404 21,857 30,456 23,273 22,006 No. of days in receivables Days 24 31 26 6 5 7
Debtors turnover ratio. Times 15.0 11.9 14.1 56.6 81.1 55.6
No. of days in payables Days 22 39 68 87 98 52
Summary of Consolidated Statement of Credit turnover ratio. Times 16.3 9.4 5.4 4.2 3.7 7.0
Cash Flows Total Assets turnover ratio Times 1.0 0.7 0.7 0.8 0.6 0.5
Fixed Assets turnover ratio Times 1.6 1.1 1.0 1.2 0.8 0.6
Net cash flow from operating activities 21,174 22,784 1,047 7,048 19,317 24,813 Operating cycle Days 49 41 6 (54) (82) (26)
Net cash flow from investing activities (5,230) (8,109) (1,676) 19,180 (22,604) (560)
Net cash flow from financing activities (14,751) (15,062) (10,823) (20,309) (13,692) (5,821)
Changes in cash & cash equivalents 1,193 (387) (11,452) 5,918 (16,978) 18,432 Investment /Market Ratios
Cash & cash equivalents – Year end 1,214 (304) 14 11,470 5,538 22,516 Earnings per Share - basic Rs./ share 13.0 8.4 7.0 11.1 6.3 4.7
Earnings per Share - diluted Rs./ share 13.0 8.4 6.9 11.1 6.3 4.7
Market value per share
Summary of Actual Production -Year end Rs./ share 69.1 67.7 68.0 84.1 78.1 -
-High during the year Rs./ share 83.5 74.4 86.3 100.7 78.2 -
Urea 1,928,080 1,806,977 1,881,016 1,967,552 1,818,937 1,561,575 -Low during the year Rs./ share 66.5 51.6 61.0 71.5 31.1 -
NPK 132,790 109,059 94,610 126,074 117,193 92,839 Cash dividend per share Rs./ share 11.0 8.5 7.0 6.0 3.0 -
Breakup value per share Rs./ share 34.1 31.8 31.3 31.8 26.2 20.5
Price earning ratio Times 5.3 8.1 9.7 7.6 12.4 -
Price to book ratio Times 0.8 0.8 0.9 1.1 0.9 -
Dividend yield ratio % 15.9 12.6 10.3 7.1 3.8 -
Dividend payout ratio % 84.4 101.7 100.3 53.9 47.7 -
Dividend cover ratio % 118.5 98.4 99.7 185.7 209.7 -
Capital Structure Ratios
Financial leverage ratio Times 0.7 0.8 0.9 0.9 1.3 2.3
Weighted average cost of debt % 6.7 8.1 9.0 11.6 13.3 14.5
Debt to Equity ratio (as per book) % 67.7 72.8 83.0 85.1 127.6 222.7
Debt to Equity ratio (as per market value) % 33.4 34.2 38.1 32.2 42.7 -
Interest Cover ratio Times 12.7 7.3 5.3 5.6 2.8 2.0
graphical analysis
Equity and Net Assets Per Share Balance Sheet Analysis (Equity and Liabilities) Profit And Loss Analysis (Expenses) Return On Equity & Capital Employed
(PKR in Million and in Percentage)
Cost of Sales Other expenses
Equity Net Assets Per Share Equity Non Current Liabilities Current Liabilities Equity Capital Employeed Return on Equity Return on Capital Employeed
Adminitrative expenses Finance cost
90,000 44.90
50,000 40 Selling and Distribution Taxation
100% 100%
80,000 39.90
45,000
35
40,000 70,000 34.90

30 80% 80%
35,000 60,000 29.90
Rupees in Million
Rupees in Million
25
Percentage
Rupees
30,000
60% 60% 50,000 24.90
25,000 20
40,000 19.90
20,000
15 40% 40%
30,000 14.90
15,000
10 20,000 9.90
10,000 20% 20%
5 10,000 4.90
5,000
0% 0%
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Balance Sheet Analysis (Assets) Total Assets and Fixed Assets Turnover
Profit and Loss Analysis (Income) Operating Life Cycle (In Days)
(PKR in Million and in Percentage)
Property, plant & Equipment Other Non Current Assets Current Assets
Revenue Other income Total Assets Fixed Assets Total Assets Turnover Fixed Assets Turnover
140,000 1.8
100% 100% 120

1.6
120,000
90%
1.4 100
80% 80%
100,000
1.2
Rupees in Million
70%
80
80,000
Times
60% 60% 1.0
50% 60
0.8
60,000
40% 40%
0.6
40,000 40
30%
0.4
20% 20%
20,000 20
10% 0.2
0% 0% -
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Inventory Debtors Creditors
Earnings, Break Up Value and Market Value Dividend Yield, Cover and Payout
(In PKR Per Share) Liquidity Analysis (PKR In Million) Capital Structure
(in Percentages)
90
250
Current Assets Current Liabilities Current Ratio Quick Ratio Debt Equity
80
70 200 50,000 1.5 100%
60 45,000 90%
150 40,000 1.2 80%

50
35,000 70%
40
100 30,000 0.9 60%
30
25,000 50%
20
50 20,000 0.6 40%
10 15,000 30%
- 10,000 0.3 20%
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 5,000 10%
- 0%
Earnings per share Break up value Market value Dividend yield Dividend cover Dividend payout
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Sales Revenue (PKR In Million) EBITDA and Principal Debt Repayments - Net Gross Profit and Net Profit
Revenue Analysis (PKR in Million) (PKR in Million and in Percentage)
120,000 EBITDA Principal Debt Payments - Net
Gross Profit Net Profit Gross Profit Ratio Net Profit Ratio
40,000 50%
100,000 Cost of Sales Distribution and marketing expenses Administrative expenses
35,000
35,000
Other operating expenses Finance cost Taxation Net Profit 40%
30,000
80,000 30,000
25,000 30%
Rupees in Million
135,000 25,000
Percentage
60,000
20,000 115,000
20,000 20%
95,000
40,000 15,000 15,000
75,000 10%
10,000 55,000 10,000

20,000
35,000 0%
5,000 5,000
15,000
- -10%
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
economic value added
Production and Sales Volume (Metric tons in 000’s) Economic value added (EVA) is a measure of a company’s financial performance based on the residual wealth
Production Sales Market Share calculated by deducting its cost of capital from its operating profit, adjusted for taxes on cash basis (NOPAT).
2,500 40%
35%
2,000 2018 2017
30%
(Rupees in Million)
1,500 25%
20% NOPAT 19,328 14,877

1,000 15%
10%
500 Less: cost of capital (12,553) (12,450)
5%
- 0%
2013 2014 2015 2016 2017 2018
Economic value added 6,775 2,427
Cash Flow Analysis (PKR in Million)
Net cash generated from operating activities
Net cash used in financing activities

Net cash used in / genrated from investing activities
free cash flows
2018 2017
25,000
(Rupees in Million)
20,000
15,000 Net cash generated from operating activities 21,174 22,784

10,000
5,000
Capital expenditures - net (4,466) (3,196)
-
2013 2014 2015 2016 2017 2018 Free cash flows 16,708 19,588
(5,000)
(10,000)
Net repayment of borrowings (103) (4,385)
(15,000)
(20,000) Free cash flow available to equity shareholders 16,605 15,203

(25,000)
Free cash flows to equity shareholders represent the cash a company can generate after required investment
to maintain or expand its asset base and net repayment of debt. It is a measurement of a company’s financial
Variance Analysis (PKR in Million) performance and health.
composition of local vs. imported

30,000
raw materials
25,000
12,098 763 292

20,000 3,804
198 577
1,360
15,000 Whereas bulk of the Company’s raw material for manufacturing is procured locally, Engro Fertilizers largely
depends on foreign sources for its traded portfolio as well as production of Phosphorous and Potash products.
10,000 Engro Fertilizers imported content accounts for 64% of its total raw material/import of materials cost. A 10%
17,414 variation in exchange rate will lead to an impact of Rs. 3.6B on costs.
5,000 11,156
-
Selling and
PAT 2017 Gross Profit Administrative Other Income Other Operating Finance Cost Taxation PAT 2018
Distribution
Expenses Expenses
Expenses
statement of value addition dupont analysis
and distribution
(Rupees in Million)
38%
Return on
Statement of Value Addition and Distribution assets
2018 2017
Wealth Generated
Total revenue inclusive of sales-tax and other income 114,857 87,848
Bought-in-materials and services (66,167) (46,498)
48,690 41,350
Wealth Distributed
15% 39%
Return on Owner’s
Taxes, duties and development surcharge to Govt. of Pakistan 19,540 18,713 assets equity ratio
Salaries, benefits and other costs of employees 4,370 3,659
Dividend to Shareholders 14,683 10,682
Mark-up / interest expense on borrowed money 2,071 2,648
Donation towards education, health, environment and natural disaster 100 83
Retained for reinvestment & future growth, depreciation, amortisation and retained profit 7,925 5,566 X
48,690 41,350
16% 93% 45,523* 117,721*
Net profit Assets Owner’s Total
margin turnover equity assets
13%
16%
17,414* 109,197* 109.197* 117,721* 72,198*
1%
Total Total
Net profit Sales Sale
1% 6% assets liabilities
4%
40%
Allocation of wealth Allocation of wealth 45%
generated during generated during
2018 2017
26%
30%
109,197* 117.721* 39,129*
Total Current
Sales Liabilities
assets
9%
9%
Taxes, duties and development surcharge to Govt. of Pakistan Taxes, duties and development surcharge to Govt. of Pakistan
Salaries, benefits and other costs of employees Salaries, benefits and other costs of employees
Dividend to Shareholders Dividend to Shareholders
Mark-up / interest expense on borrowed money Mark-up / interest expense on borrowed money
Donation towards education, health, environment and natural disaster Donation towards education, health, environment and natural disaster
Retained for reinvestment & future growth, depreciation, amortisation and retained profit Retained for reinvestment & future growth, depreciation, amortisation and retained profit 91,783* 33,069*
Total Non-current
cost liabilities
*Amount in PKR millions
cashflow statement - direct method
(Rupees in Million) 2018 2017
Cash Flows From Operating Activities
Cash receipts from customers - net 104,391 84,116

Cash paid to suppliers / service providers
and employees - net (75,051) (57,530)
Payment to Workers’ Welfare fund - net (93) (53)
Payment to Workers’ Profit Participation fund - net (1,205) (840)
Finance cost paid (2,231) (2,651)
Income tax paid (6,864) (3,994)
Subsidy received from Government 2,227 3,736
Net cash generated from operating activities 21,174 22,784
Cash Flows From Investing Activities
Purchases of property, plant and equipment and intangibles (4,495) (3,900)

Proceeds from disposal of property, plant and equipment 29 704
Purchase of short term investments (54,211) (27,106)
Proceeds from sale of short term investments 52,966 22,106
Income on deposits / other financial assets 481 87
Net cash utilised in investing activities (5,230) (8,109)
Cash Flows From Financing Activities
Proceeds from long term borrowings 8,183 1,500

Repayments of :
- long term borrowings (8,287) (5,085)
- short term borrowings - (800)
Dividends paid (14,647) (10,677)
Net cash utilised in financing activities (14,751) (15,062)
Net increase in cash and cash equivalents 1,193 (387)
Cash and cash equivalents at beginning of the year (304) 11

Exchange gain on translation 325 72
Cash and cash equivalents at end of the year 1,214 (304)
consolidated independent auditor’s report
financials A F FERGUSON&Co
To the members of Engro Fertilizers Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the annexed consolidated financial statements of Engro Fertilizers Limited and its subsidiaries (the
Group), which comprise the consolidated statement of financial position as at December 31, 2018, and the consolidated
statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies and other explanatory information.
In our opinion, consolidated financial statements give a true and fair view of the consolidated financial position of the
Group as at December 31, 2018, and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with the accounting and reporting standards as applicable in Pakistan.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the
International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the
Institute of the Chartered Accountants of Pakistan (the Code), and we have fulfilled our other ethical responsibilities in
accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.

A F FERGUSON&Co A F FERGUSON&Co
Following are the key audit matters:
S.No Key audit matters How the matter was addressed in our audit S.No Key audit matters How the matter was addressed in our audit
1. First time application of Fourth Schedule to the including related financial impacts, we have considered - reviewing correspondence of the Group with the relevant
Companies Act, 2017 provisions and contingent liabilities relating to income authorities including judgments or orders passed by the
(Refer note 3.1.2 to the consolidated financial tax and sales tax a key audit matter. competent authorities in relation to the issues involved
statements) or matters which have similarities with the issues
involved;
The Fourth Schedule to the Companies Act, 2017 Our audit procedures amongst others included the
became applicable to the Group for the first time for following: - checking mathematical accuracy of the calculations
the preparation of annual financial statements. - reviewing and obtaining understanding of the underlying the provisions, if any; and
requirements of the Fourth Schedule to the Companies - reviewing the adequacy of the disclosures made by the
As part of transition to the requirements, management Act, 2017; Group with regard to the applicable accounting and
performed an analysis to identify differences between
reporting standards.
the previous and current Fourth Schedules and as a - considering the management’s process of identifying
result certain amendments relating to presentation and the additional disclosures required in the Company’s 3. Provision in respect of Gas Infrastructure
disclosures were made in the consolidated financial annexed consolidated financial statements; Development Cess (GIDC)
statements. (Refer note 20.1 to the consolidated financial
- obtaining relevant underlying supports for the additional statements)
In view of the various new disclosures prepared and disclosures and assessed their appropriateness for Our audit procedures amongst others included the
presented in the consolidated financial statements, we sufficient audit evidence; and The Group maintains a provision in respect of Gas following:
have considered this a key audit matter. Infrastructure Development Cess (GIDC) of Rs.
12,576,404 thousand as at December 31, 2018. - obtaining an understanding of the background facts
- verifying on a test basis the supporting evidence for the pertaining to provision recorded in respect of GIDC
additional disclosures and ensured appropriateness of The Holding Company has obtained ad-interim stay through meetings with the management and review of
the disclosures made. orders against the GIDC Act, 2015 from the Sindh the minutes of the meetings of those charged with
High Court which has restrained the gas supplying governance;
2. Income tax and Sales tax companies from charging and / or recovering the cess
(Refer note 22 and 30 to the consolidated financial under the GIDC Act, 2015 till the final decision on this - reading correspondence of the Holding Company with
statements) matter. In a separate case, Peshawar High Court the regulatory authorities and Holding Company’s
passed a judgment on May 31, 2017 validating the external legal counsel;
The Group has recognized provisions and has disclosed Our audit procedures amongst others included the new GIDC Act, against which the Holding Company
contingent liabilities in respect of certain income tax following: has filed a petition in the Supreme Court of Pakistan. - obtaining confirmation from external legal counsel in
and sales tax matters, which are pending adjudication
respect of the current developments in the case including
before various appellate and legal forums. - obtaining and reviewing details of the pending tax The management believes that the provision recorded their assessment of the potential outcome of the matter;
matters and discussed the same with the Group’s as at December 31, 2018 in respect of GIDC and
Provisions and contingencies require management of management; represents the management’s current best estimate
the Group to make judgements and estimates in relation of the amounts. Given the nature and significance of - assessing the adequacy of provisioning based on the
to the interpretation of laws, statutory rules, regulations, - circularizing confirmations to the Group’s external legal the amounts involved in the aforementioned case and advice of the legal counsel and the appropriateness of
and the probability of outcome and financial impact, if and tax counsels for their views on matters being the legal forum at which this matter is currently related disclosures made in the consolidated financial
any, on the Group in respect of such provisions and handled by them; pending, the ultimate outcome and the resultant statements in accordance with the accounting and
contingencies. accounting in the consolidated financial statements reporting standards.
- involving internal tax professionals to assess is subject to the exercise of significant judgement
Due to significance of amounts involved, inherent management’s conclusions on contingent tax matters which may change over time as new facts emerge
uncertainties with respect to the outcome of these and evaluating the consistency of such conclusions and the legal case progresses. Therefore, we have
matters and use of significant management judgement with the views of management and external tax advisors considered this as a key audit matter.
and estimates to assess the same engaged by the Group;
Information Other than the Financial Statements and Auditor’s Report Thereon
S.No Key audit matters How the matter was addressed in our audit
Management is responsible for the other information. The other information comprises the information included in the annual
4. Sales report, but does not include the consolidated and unconsolidated financial statements and our auditor’s reports thereon.
(Refer note 23 to the consolidated financial statements)
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
The Group provides its customers with various Our audit procedures amongst others included the assurance conclusion thereon.
discounts and allowances which are accounted for as following:
a deduction from the gross sales. Further, accruals for In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
unsettled amounts in this respect are recognized as at - considering the appropriateness of the Group’s process doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
year end. for making judgements in this area and tested the design, knowledge obtained in the audit or otherwise appears to be materially misstated.
implementation and operating effectiveness of controls
Certain portion of these discounts and allowances are adopted by management in determining the accounting If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
not based on achievement of specific criteria, and the for discounts, allowances and other sales deductions; required to report that fact. We have nothing to report in this regards.
management is required to make certain judgments in
respect of the level of discounts and allowances to be - undertaking a review of the historical accuracy of Responsibilities of Management and the Board of Directors for the Consolidated Financial Statements
provided to the respective customers. judgements by reference to actual discounts paid in prior
periods; Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance
Further, there is a presumed risk of sales being with accounting and reporting standards as applicable in Pakistan and Companies Act, 2017 and for such internal control as
overstated resulting from the pressure management - agreeing a sample of discounts and allowances provided management determines is necessary to enable the preparation of consolidated financial statements that are free from material
may feel to achieve performance targets set for the during the year to supporting documentation; misstatement, whether due to fraud or error.
year. Accordingly, we consider that there is a risk of
material misstatement of financial statements relating - obtaining supporting documentation for sales In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as
to transactions occurring close to the year end, as transactions recorded either side of year end to determine a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting
transactions could be recorded in the wrong financial whether revenue was recognised in the correct period; unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
period.
- reviewing and obtaining comfort over the management’s Board of Directors is responsible for overseeing the Group’s financial reporting process.
On account of sales being considered as an area internal control processes over revenue recognition and
involving high level of risk of material misstatement validation of appropriate cut-off; and Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
therefore significant audit efforts are involved for the
verification of the same. Accordingly this has been - critically assessing manual journal entries posted to sales Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
considered to be a key audit matter. to identify unusual or irregular items. misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level
of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
A F FERGUSON&Co
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the
consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Waqas Aftab Shaikh.
A. F. Ferguson & Co.

Karachi
Date: March 6, 2019
consolidated statement of financial position
as at december 31, 2018
(Amounts in thousand) (Amounts in thousand)
Note 2018 2017

----------------Rupees--------------- Note 2018 2017
ASSETS ---------------Rupees-------------
EQUITY & LIABILITIES
Non-current assets
Equity
Property, plant and equipment 5 68,203,956 68,923,195
Share capital 15 13,352,993 13,352,993
Intangible assets 6 4,487,771 4,475,474
Reserves
Long term loans and advances 7 142,644 134,535
72,834,371 73,533,204 Share premium 16 3,384,904 3,384,904
Exchange revaluation reserve 16 408,817 83,183
Current assets Remeasurement of post employment benefits 16 (44,729) (47,315)
Unappropriated profit 16 28,421,170 25,695,946
Stores, spares and loose tools 8 5,325,287 5,279,794 32,170,162 29,116,718
TOTAL EQUITY 45,523,155 42,469,711
Stock-in-trade 9 11,538,309 7,636,214
Liabilities
Trade debts 10 9,109,671 5,418,748
Non-current liabilities
Loans, advances, deposits and prepayments 11 1,363,411 1,157,243
Borrowings 17 25,715,045 22,784,014
Other receivables 12 9,043,657 8,806,842 Deferred liabilities 18 7,161,541 9,453,556
Service benefits obligations 19 192,727 174,784
Accrued income 37,276 24,833 33,069,313 32,412,354
Current liabilities
Short term investments 13 7,739,231 8,163,442
Trade and other payables 20 29,071,928 21,966,241
Cash and bank balances 14 729,836 1,795,929 Accrued interest / mark-up 425,920 595,441
44,886,678 38,283,045 Taxes payable 3,408,022 913,246
Current portion of:
TOTAL ASSETS 117,721,049 111,816,249 - borrowings 17 5,095,584 8,119,864
- service benefits obligations 19 51,487 50,271
Short term borrowings 21 1,009,968 5,264,228
Unclaimed dividend 65,672 24,893
39,128,581 36,934,184
TOTAL LIABILITIES 72,197,894 69,346,538
Contingencies and Commitments 22
TOTAL EQUITY AND LIABILITIES 117,721,049 111,816,249
The annexed notes from 1 to 46 form an integral part of these consolidated financial statements.
Imran Ahmed Nadir Salar Qureshi Ghias Khan

Chief Financial Officer Chief Executive Chairman
consolidated statement of profit or loss consolidated statement of comprehensive income
for the year ended december 31, 2018 for the year ended december 31, 2018
(Amounts in thousand except for earnings per share) (Amounts in thousand)
Note 2018 2017 2018 2017

------------------Rupees---------------- ----------------Rupees--------------
Profit for the year 17,413,518 11,155,622

Net sales 23 109,196,586 77,129,343
Other comprehensive income:
Cost of sales 24 (73,880,139) (53,910,755)
Items potentially re-classifiable to Profit or Loss
Gross profit 35,316,447 23,218,588
Exchange differences on translation of foreign operations 325,634 72,381
Selling and distribution expenses 25 (8,007,915) (7,244,739)
Items not potentially re-classifiable to Profit or Loss
Administrative expenses 26 (1,585,426) (1,292,798)
Remeasurement of post employment benefits obligations 3,642 (30,375)
25,723,106 14,681,051
Tax relating to remeasurement
Other income 27 2,061,954 5,865,860 of post employment benefits obligations (1,056) 9,706
Other operating expenses 28 (1,431,926) (1,234,367) 2,586 (20,669)
Finance cost 29 (2,070,933) (2,647,774) Other comprehensive income for the year, net of tax 328,220 51,712
(3,502,859) (3,882,141)
Total comprehensive income for the year 17,741,738 11,207,334
Profit before taxation 24,282,201 16,664,770
Taxation 30 (6,868,683) (5,509,148)

Earnings per share - basic and diluted 31 13.04 8.36
Imran Ahmed Nadir Salar Qureshi Ghias Khan Imran Ahmed Nadir Salar Qureshi Ghias Khan
Chief Financial Officer Chief Executive Chairman Chief Financial Officer Chief Executive Chairman
consolidated statement of changes in equity consolidated statement of cash flows
(Amounts in thousand) Reserves (Amounts in thousand)
Note 2018 2017
Capital Revenue
-----------------Rupees-------------
Share Share Exchange Remeasurement Unappropriated Total
capital premium revaluation of post profit Cash Flows From Operating Activities
reserve employment
benefits
---------------------------------------------------Rupees-----------------------------------------------
Cash generated from operations 35 30,322,653 29,489,065
Balance as at January 1, 2018 13,352,993 3,384,904 83,183 (47,315) 25,695,946 42,469,711
Retirement and other service benefits paid (45,695) (45,888)
Transactions with owners Finance cost paid (2,230,533) (2,651,371)
Taxes paid (6,864,007) (3,994,219)
Dividends: Long term loans and advances - net (8,109) (13,898)
- Final 2017: Rs. 3.00 per share - - - - (4,005,898) (4,005,898)
- 1st interim 2018: Rs. 4.00 per share - - - - (5,341,198) (5,341,198)
- 2nd interim 2018: Rs. 4.00 per share - - - - (5,341,198) (5,341,198) Net cash generated from operating activities 21,174,309 22,783,689
- - - - (14,688,294) (14,688,294) Cash Flows From Investing Activities

Total comprehensive income for the
year ended December 31, 2018
Purchases of property, plant and equipment and intangibles (4,495,017) (3,900,123)
Profit for the year - - - - 17,413,518 17,413,518 Proceeds from disposal of property, plant and equipment 28,586 704,092
Other comprehensive income: Purchase of short term investments (54,211,448) (27,105,991)
- exchange revaluation - - 325,634 - - 325,634
- remeasurements, net of tax - - - 2,586 - 2,586
Proceeds from sale of short term investments 52,966,271 22,106,555
Income on deposits / other financial assets 481,129 86,857
- - 325,634 2,586 17,413,518 17,741,738
Net cash utilised in investing activities (5,230,479) (8,108,610)
Balance as at December 31, 2018 13,352,993 3,384,904 408,817 (44,729) 28,421,170 45,523,155

Balance as at January 1, 2017 13,309,323 3,132,181 10,802 (26,646) 25,222,724 41,648,384
Proceeds from long term borrowings 8,183,497 1,500,000
Shares issued upon exercise of conversion option
(note 15) 43,670 252,723 - - - 296,393
Repayments of :
Transactions with owners - long term borrowings (8,286,667) (5,085,439)
Dividends: - short term borrowings - (800,000)
Dividends paid (14,647,515) (10,677,051)
- 2nd interim 2017: Rs. 3.00 per share - - - - (4,005,898) (4,005,898)
Net cash utilised in financing activities (14,750,685) (15,062,490)
- - - - (10,682,400) (10,682,400)
Total comprehensive income for the
Net increase in cash and cash equivalents 1,193,145 (387,411)
Profit for the year - - - - 11,155,622 11,155,622
Other comprehensive income: Cash and cash equivalents at beginning of the year (304,293) 10,737
- exchange revaluation - - 72,381 - - 72,381
- remeasurements, net of tax - - - (20,669) - (20,669)
Exchange gain translation 325,634 72,381
- - 72,381 (20,669) 11,155,622 11,207,334
Cash and cash equivalents at end of the year 36 1,214,486 (304,293)
Balance as at December 31, 2017 13,352,993 3,384,904 83,183 (47,315) 25,695,946 42,469,711
consolidated notes to and forming part of the financial statements
for the year ended december 31, 2018
1. LEGAL STATUS AND OPERATIONS 2.3 Corporate tax rates for year ended December 31, 2018 and subsequent years were reduced by 1% for each tax year
uptil tax year 2023 . Due to the reduction in current and future corporate tax rates, decrease in deferred tax liability
Engro Fertilizers Limited (the Holding Company) is a public company incorporated in Pakistan on June 29, 2009 as a amounting to Rs 2,048,552 has been recognized in these consolidated financial statements as elaborated in note
wholly owned subsidiary of Engro Corporation Limited (the Parent Company), which is a subsidiary of Dawood Hercules 30.9.
Corporation Limited (the Ultimate Parent Company). The Holding Company is listed on Pakistan Stock Exchange Limited
(PSX). 2.4 The Holding Company has accrued Rs. 6,365,269 in lieu of Gas Infrastructure Development Cess during the year,
accumulating the total accrual to Rs. 12,576,404 as explained in 20.1.
The principal activity of the Holding Company is manufacturing, purchasing and marketing of fertilizers. The business
units of the Holding Company include the following: 2.5 Subsequent to the enactment of Finance Act 2018, the Holding Company has recognized liability for Super Tax under
Section 4B of the Income Tax Ordinance, 2001 relating to tax years 2018 and 2019 amounting to Rs. 561,721 and
Business Unit Geographical Location Rs. 572,703 respectively as detailed in note 30.4 and 30.5.
Head / Registered Office 7th & 8th floors, The Harbour Front Building, Plot Number 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
HC-3, Block 4, Scheme Number 5, Clifton, Karachi.
The significant accounting policies applied in the preparation of these consolidated financial statements are set out
Engro Daharki Plant District Ghotki, Sindh. below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Engro Zarkhez Plant EZ/ 1 / P – 1 – II Eastern Zone, Port Qasim, Karachi. 3.1 Basis of preparation
1.1 The 'Group' consists of: 3.1.1 These consolidated financial statements have been prepared under the historical cost convention, except for
Holding Company: Engro Fertilizers Limited re-measurement of certain financial assets and liabilities at fair value through profit or loss and recognition of certain
staff retirement benefits at present value.
Subsidiary Companies: Companies in which the Holding Company owns over 50% of voting rights, or companies
controlled by the Holding Company: 3.1.2 Statement of compliance
1.1.1 Engro Eximp FZE (EEF) was incorporated in the Jebel Ali Free Zone, Emirate of Dubai, on August 4, 2011 as a wholly These consolidated financial statements have been prepared in accordance with the accounting and reporting standards
owned subsidiary of Engro Eximp (Private) Limited (EEPL). as applicable in Pakistan. The accounting and reporting standards applicable on the Group comprise of:
1.1.2 EFert Agritrade (Private) Limited (EAPL) was incorporated on July 6, 2017, as a wholly owned subsidiary of the Holding - International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB)
Company to carry out trading and distribution of imported fertilizer as part of the business reorganization. The Holding as notified under the Companies Act, 2017 (the Act); and
Company transferred its business of trading and distribution of imported fertilizer to the new subsidiary and holds 10,000
ordinary shares of Rs. 10 each in EAPL. - Provision of and directives issued under the Act.
2. SUMMARY OF SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING THE GROUP'S FINANCIAL POSITION AND Where provisions of and directives issued under the Act differ from the requirements of IFRSs, the provisions of and
PERFORMANCE DURING THE YEAR directives issued under the Act have been followed for the preparation and presentation of the consolidated financial
statements.
Following is the summary of significant transactions and events affecting the Groups’s financial position and performance
during the year: 3.1.3 The preparation of consolidated financial statements in conformity with the above requirements requires the use of
certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying
2.1 During the year, the Holding Company has incurred capital expenditure amounting to Rs. 4,333,447. Majority of capital Holding Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where
expenditure relates to plant and machinery. The said capital expenditure mainly includes expenditure relating to gas assumptions and estimates are significant to the consolidated financial statements are disclosed in note 4.
enrichment and compression facilities. These expenditures will enable the Holding Company to enhance plant production
and efficiency. 3.1.4 Initial application of a Standard, Amendment or an Interpretation to an existing Standard
2.2 The subsidy scheme announced by Government of Pakistan in 2017 was discontinued in June 2018. Further, a) Standards, amendments to published standards and interpretations that are effective for the year and
Rs. 2,227,631 was recovered on account of subsidy. However, Rs. 6,368,366 is still outstanding as disclosed in note are relevant to the Group
12.1.
The following amendments to the published accounting and reporting standards are mandatory for the financial
year beginning January 1, 2018 and are relevant to the Group:
- IFRIC 22, ‘Foreign currency transactions and advance consideration’ (effective 1 January 2018). This lessees were required to make a distinction between a finance lease (on statement of financial position) and
amendment clarify the determination of the date of transaction for the exchange rate to be used on initial an operating lease (off statement of financial position). IFRS 16 now requires lessees to recognize a lease
recognition of a related asset, expense or income where an entity pays or receives consideration in advance liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. The IASB
for foreign currency-denominated contracts. For a single payment or receipt, the date of the transaction has included an optional exemption for certain short-term leases and leases of low-value assets; however,
should be the date on which the entity initially recognises the non-monetary asset or liability arising from the this exemption can only be applied by lessees. For lessors, the accounting stays almost the same. However,
advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments as the IASB has updated the guidance on the definition of a lease (as well as the guidance on the combination
or receipts for one item, a date of transaction should be determined as above for each payment or receipt. and separation of contracts), lessors will also be affected by the new standard. At the very least, the new
The impact of the above amendment is not considered material on these consolidated financial statements. accounting model for lessees is expected to impact negotiations between lessors and lessees. Under IFRS
16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset
The other new standards, amendments to published accounting and reporting standards and interpretations for a period of time in exchange for consideration. The management is in the process of assessing the impact
that are mandatory for the financial year beginning on January 1, 2018 are considered not to be relevant or this standard will have on the consolidated financial statements of the Group.
to have any significant effect on the Group's financial reporting and operations.
There are number of other standards, amendments and interpretations to the published accounting and
b) Standards, amendments to published standards and interpretations that are not yet effective and have reporting standards that are not yet effective and have not been early adopted by the Group and, therefore,
not been early adopted by the Group have not been presented in these consolidated financial statements.
The following new standards are not effective for the financial year beginning on January 1, 2018 and have not 3.1.5 Basis of consolidation
been early adopted by the Group:
i) Subsidiaries
- IFRS 9, ‘Financial instruments’ (effective for periods beginning on or after July 1, 2018).
IFRS 9 addresses the classification, measurement and recognition of financial assets and financial liabilities Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies
and replaces the guidance in IAS 39 “Financial Instruments: Recognition and Measurement” that relates to generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of
the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed potential voting rights that are currently exercisable or convertible are considered when assessing whether the
measurement model and establishes three primary measurement categories for financial assets: amortised Group controls another entity.
cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVPL).
The basis of classification depends on the entity's business model and the contractual cash flow Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
characteristics of the financial asset. Investments in equity instruments are required to be measured at fair de-recognized from the date the control ceases. These consolidated financial statements include Engro Fertilizers
value through profit or loss with the irrevocable option at inception to present changes in fair value in OCI Limited (the Holding Company) and all companies in which it directly or indirectly controls, beneficially owns or
not recycling. There is also a new expected credit losses model that replaces the incurred loss impairment holds more than 50% of the voting securities or otherwise has power to elect and appoint more than 50% of
model used in IAS 39. For financial liabilities, there were no changes to classification and measurement its directors (the Subsidiaries)
except for the recognition of changes in own credit risk in other comprehensive income, for liabilities
designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge effectiveness by The Group uses the acquisition method of accounting to account for business combinations. The consideration
replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and
item and hedging instrument and for the 'hedged ratio' to be the same as the one management actually the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or
uses for risk management purposes. The management is in the process of assessing the impact this standard liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
will have on the consolidated financial statements of the Group. Identifiable assets acquired and liabilities (including contingent liabilities) assumed in a business combination are
measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group
- IFRS 15, ‘Revenue from contracts with customers’ (effective for periods beginning on or after July 1, 2018). recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s
This standard stipulates clarifications of the guidance on identifying performance obligations, accounting for proportionate share of the acquiree’s identifiable net assets.
License of intellectual property and the principal versus agent assessment (gross versus net revenue
presentation). New and amended illustrative examples have been added for each of those areas of guidance. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer's previously
The IASB has also included additional practical expedients related to transition to the new revenue standard. held equity interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising
Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct from such re-measurement are recognized in consolidated statement of profit or loss.
the use and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS
11 'Construction contracts’ and related interpretations. The Group is yet to assess the full impact of the Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of
standard. The management is in the process of assessing the impact this standard will have on the consolidated non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this is less than the fair
financial statements of the Group. value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognized
in consolidated statement of profit or loss.
- IFRS 16, ‘Leases’ (effective for periods beginning on or after January 1, 2019). This standard replaces the
current guidance in IAS 17 and is a far reaching change in accounting by lessees in particular. Under IAS 17,
Inter-company transactions, balances, income and expenses on transactions between group companies are Depreciation method, useful lives and residual values are reviewed annually.
eliminated. Profits and losses (unrealized) are also eliminated. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the policies adopted by the Group. 3.2.2 Leased assets
ii) Transactions and non-controlling interests Leases in terms of which the Group assumes substantially all the risks and rewards of ownership, are classified as
finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value
The Group treats transactions with non-controlling interests that do not result in loss of control as transactions and present value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance
with equity owners of the Group. The difference between fair value of any consideration paid and the relevant with the accounting policy applicable to similar owned asset. Outstanding obligations under the lease less finance
share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on cost allocated to future periods are shown as a liability.
disposals to non-controlling interests are also recorded in equity.
Finance cost under lease agreements are allocated to the periods during the lease term so as to produce a constant
iii) Disposal of subsidiaries periodic rate of finance cost on the remaining balance of principal liability for each period.
When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain
to its fair value, with the change in carrying amount recognized in consolidated statement of profit or loss. The that the Group will obtain ownership by the end of the lease term.
fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an
associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive 3.3 Intangible assets
income in respect of that entity are accounted for as if the Group had directly disposed off the related assets or
liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to a) Computer Software and licenses
consolidated profit or loss.
Costs associated with maintaining computer software programmes are recognised as an expense when incurred.
3.2 Property, plant and equipment However, costs that are directly attributable to identifiable software and have probable economic benefits exceeding
the cost beyond one year, are recognised as an intangible asset. Direct costs include the purchase cost of software
3.2.1 Owned assets (license fee) and related overhead costs.
These are stated at historical cost less accumulated depreciation and impairment losses, if any, except freehold land Expenditure which enhances or extends the performance of computer software beyond its original specification
and capital work in progress which are stated at cost. Historical cost includes expenditure that is directly attributable and useful life is recognised as a capital improvement and added to the original cost of the software.
to the acquisition of the items including borrowing costs (note 3.21). The cost of self constructed assets includes the
cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition Computer software and license cost treated as intangible assets are amortised from the date the software is put
for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are to use on a straight-line basis over a period of 4 years.
located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment. b) Rights for future gas utilization
Where major components of an item of property, plant and equipment have different useful lives, they are accounted Rights for future gas utilization represent premium paid to the Government of Pakistan for allocation of 100 MMSCFD
for as separate items of property, plant and equipment. natural gas for a period of 20 years for Enven plant. The rights are being amortised from the date of commercial
production on a straight-line basis over the remaining allocation period.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Group and the cost c) Goodwill
of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and
maintenance are charged to the consolidated statement of profit or loss during the financial year in which they are Goodwill represents the difference between the consideration paid for acquiring interests in a business and the
incurred. fair value of the Group's share of its net assets at the date of acquisition and is carried at cost less accumulated
impairment, if any.
Disposal of asset is recognised when significant risk and rewards incidental to ownership have been transferred to
buyers. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are d) Right to use the brand
recognised within ‘Other operating expenses / income’ in the consolidated statement of profit or loss.
These are stated at cost less impairment, if any.
Depreciation is charged to the consolidated statement of profit or loss using the straight line method, except for catalyst
whose depreciation is charged on the basis of number of production days, whereby the cost of an operating asset The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances indicate
less its estimated residual value, if significant, is depreciated over its useful life. Depreciation on addition is charged that the carrying values may not be recoverable. If any such indication exists, assets or cash generating units are tested
from the month following the month in which the asset is available for use and on disposals up to the preceding month for impairment. Also, goodwill is tested for impairment atleast once a year and other intangibles with indefinite life are
of disposal. tested for impairment at reporting date. Where the carrying value exceeds the estimated recoverable amount, these
are written down to their recoverable amount and the resulting impairment is charged to consolidated statement of d) Available-for-sale
profit or loss.
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
Impairment is reversed only if there have been changes in estimates used to determine recoverable amounts and only in any of the other categories. They are included in non-current assets unless the investment matures or
to the extent that the revised recoverable amount does not exceed the carrying values that would have existed, had management intends to dispose it off within 12 months of the end of the reporting date.
there been no recognition of impairment, except impairment of goodwill which is not reversed.
3.6.2 Recognition and measurement
The useful lives of intangible assets are reviewed at each reporting date to determine whether events and circumstances
continue to support an indefinite useful life assessment for the asset. Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Group
commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs
3.4 Impairment of non-financial assets except for all financial assets carried at fair value through profit or loss. Financial assets carried at fair value through
profit or loss are initially recognised at fair value, and transaction costs are expensed in the consolidated statement
Assets that are subject to depreciation / amortisation are reviewed at each reporting date to identify circumstances of profit or loss. Financial assets are derecognised when the rights to receive cash flows from the investments have
indicating occurrence of impairment loss or reversal of previous impairment losses. An impairment loss is recognised expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at
higher of an asset's fair value less cost to sale and value in use. Reversal of impairment loss is restricted to the original fair value. Held to maturity and loans and receivables are subsequently carried at amortised cost using the effective
cost of the asset. interest rate method.
3.5 Non current assets (or disposal groups) held-for-sale Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category
are presented in the consolidated statement of profit or loss within ‘other operating expenses / income’ in the year in
Non-current assets (or disposal groups) are classified as assets held-for-sale when their carrying amount is to be which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower consolidated statement of profit or loss as part of other income when the Group’s right to receive payments is
of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale established.
transaction rather than through continuing use. Impairment losses on initial classification as held for sale and subsequent
gains or losses on remeasurement are recognised in the consolidated statement of profit or loss. Changes in fair value of monetary and non-monetary securities classified as available-for-sale are recognised in the
consolidated statement of comprehensive income. When securities classified as available-for-sale are sold or impaired,
3.6 Financial assets the accumulated fair value adjustments recognised in consolidated statement of comprehensive income are transferred
in the consolidated statement of profit or loss.
3.6.1 Classification
Interest on available-for-sale securities calculated using the effective interest rate method is recognised in the
The Group classifies its financial assets in the following categories: at fair value through profit or loss, held to maturity, consolidated statement of profit or loss as part of other income. Dividends on available for sale equity instruments
loans and receivables, and available-for-sale. The classification depends on the purpose for which the financial assets are recognised in the consolidated statement of profit or loss as part of other income when the Group’s right to
were acquired. Management determines the classification of its financial assets at initial recognition. receive payments is established.
a) At fair value through profit or loss The Group assesses at the end of each reporting date whether there is objective evidence that a financial asset or a
group of financial assets is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified loss is removed from equity and recognised in the consolidated profit or loss. Impairment losses recognised in the
in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized consolidated profit or loss on equity instruments are not reversed through the profit or loss. Impairment testing of trade
as held for trading unless they are designated as hedges. Assets in this category are classified as current assets. debts and other receivables is described in note 3.11.
b) Loans and receivables 3.7 Financial liabilities
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted All financial liabilities are recognised at the time when the Group becomes a party to the contractual provisions of an
in an active market. They are included in current assets, except for maturities greater than 12 months after the instrument. Financial liabilities are extinguished when these are discharged or cancelled or expire or when there is
end of the reporting period; which are classified as non-current assets. substantial modification in the terms and conditions of the original financial liability or part of it. The terms are
substantially different if the discounted present value of the cash flows under the new terms, including any fees paid
c) Held to maturity net of any fees received and discounted using the original effective interest rate, is at least ten percent different from
the discounted present value of the remaining cash flows of the original financial liability. If modification of terms is
Held to maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the
maturity with a positive intention and ability to hold to maturity. extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred
adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
3.8 Offsetting financial instruments 3.14 Borrowings
Financial assets and liabilities are offset and the net amount is reported in the consolidated statement of financial Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried
position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is
either on a net basis, or realise the asset and settle the liability simultaneously. The legally enforceable right must not recognised in the consolidated statement of profit or loss over the period of the borrowings using the effective interest
be contingent on future events and must be enforceable in the normal course of business and in the event of default, rate method.
insolvency or bankruptcy of the Group or the counterparty.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
3.9 Stores, spares and loose tools liability for at least 12 months after the reporting date.
These are valued at weighted average cost except for items in transit which are stated at invoice value plus other 3.15 Trade and other payables
charges paid thereon till the reporting date. For items which are slow moving and / or identified as surplus to the
Group's requirements, adequate provision is made for any excess book value over estimated realisable value. The Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the
Group reviews the carrying amount of stores and spares on a regular basis and provision is made for obsolescence. effective interest rate method.
Spare parts of capital nature which can be used only in connection with an item of property, plant and equipment are These are classified as current liabilities if payment is due within 12 months or less (or in the normal operating cycle
shown separately as major spare parts and stand by equipment. of the business if longer). If not, they are presented as non-current liabilities.
3.10 Stock-in-trade 3.16 Current and deferred income tax
These are valued at the lower of cost and net realisable value. Cost is determined using weighted average method The tax expense for the period comprises current and deferred tax. Tax is recognised in the consolidated statement
except for raw materials in transit which are stated at cost (invoice value) plus other charges incurred thereon till the of profit or loss, except to the extent that it relates to items recognised in the consolidated statement of comprehensive
reporting date. Cost in relation to finished goods includes applicable purchase cost and manufacturing expenses. The income or directly in equity. In this case the tax is also recognised in the consolidated statement of comprehensive
cost of work in process includes material and proportionate conversion costs. income or directly in equity, respectively.
Net realisable value signifies the estimated selling price in the ordinary course of business less all estimated costs of Current
completion and costs necessary to be incurred in order to make the sales.
The current income tax charge is based on the taxable income for the year calculated on the basis of the tax laws
3.11 Trade debts and other receivables enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
These are recognised initially at fair value plus directly attributable transaction costs, if any and subsequently measured Deferred
at amortised cost using effective interest rate method less provision for impairment, if any. A provision for impairment
is established if there is objective evidence that the Group will not be able to collect all amounts due according to the Deferred tax is recognised using the balance sheet method, providing for all temporary differences between the
original terms of receivables. The amount of provision is charged to consolidated statement of profit or loss. Trade carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
debts and other receivables considered irrecoverable are written-off. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date.
3.12 Cash and cash equivalents
A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available against
Cash and cash equivalents in the consolidated statement of cash flows includes cash in hand, balance with banks, which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced
other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts / short to the extent that it is no longer probable that the related tax benefit will be realised.
term borrowings. Bank overdrafts are shown within short term borrowings in current liabilities on the consolidated
statement of financial position. 3.17 Employee benefits
3.13 Share capital 3.17.1 Defined contribution plans
Ordinary shares are classified as equity and recognised at their face value. Incremental costs directly attributable to A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contribution into a
the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions
to defined contribution plans are recognised as an employee benefit expense in consolidated statement of profit or
loss when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a
reduction in future payments is available.
The Group contributes to: 3.17.5 Employees' compensated absences
- defined contribution provident fund for its permanent employees. Monthly contributions are made both by the The Group accounts for compensated absences on the basis of unavailed leave balance of each employee at the end
Group and employees to the fund at the rate of 10% of basic salary; of the year.
- defined contribution pension fund for the benefit of those management employees who have not opted for defined 3.18 Provisions
contribution gratuity fund as explained in note 3.17.3. Monthly contributions are made by the Group to the fund
at rates ranging from 12.5% to 13.75% of basic salary; and Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events
- defined contribution gratuity fund for the benefit of those management employees who have selected to opt out and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be
of defined benefit gratuity fund and defined contribution pension plans as more fully explained in note 3.17.3. made of the amount of the obligation. Provisions are reviewed at each reporting date and adjusted to reflect current
Monthly contributions are made by the Group to the fund at the rate of 8.33% of basic salary. best estimate.
All of the aforementioned funds are managed by the Parent Company. 3.19 Foreign currency transactions and translation
3.17.2 Defined benefit plans 3.19.1 These consolidated financial statements are presented in Pakistan Rupees, which is the Group’s functional currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
A defined benefit plan is a post-employment benefit plan other than the defined contribution plan. The Group's net dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and
obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies
have earned in return for their service in current and prior periods; that benefit is discounted to determine its present are recognised in the consolidated statement of profit or loss.
value. The calculation is performed annually by a qualified actuary using the Projected Unit Credit method, related
details of which are given in note 34 to the consolidated financial statements. 3.19.2 The results and financial position of all the group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
Remeasurements (actuarial gains / losses) in respect of defined benefit plan are recognised directly in equity through currency as follows:
other comprehensive income.
- assets and liabilities for each reporting date presented are translated at the average closing rate at the date of
Contributions require assumptions to be made of future outcomes which mainly include increase in remuneration, that reporting date;
expected long-term return on plan assets and the discount rate used to convert future cash flows to current values.
Calculations are sensitive to changes in the underlying assumptions. - income and expenses for each consolidated statement of profit or loss item are translated at average exchange
rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the
The Group also contributes to: transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions;
and
- defined benefit funded pension scheme for its management employees.
- all resulting exchange differences are recognized as a separate component of equity.
- defined benefit funded gratuity schemes for its management and non-management employees.
3.20 Revenue recognition
The pension scheme provides life time pension to retired employees or to their spouses. Contributions are made
annually to these funds on the basis of actuarial recommendations. The pension scheme has been curtailed and Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the amount
effective from July 1, 2005, no new members are inducted in this scheme. of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable
and is reduced for marketing allowances. Revenue is recognised on the following basis:
3.17.3 In June 2011, the Group gave a one time irrevocable option to selected members of MPT Employees' Defined Benefit
Gratuity Fund and Defined Contribution Pension Fund to join a new MPT Employee's Defined Contribution Gratuity - Sales revenue is recognized when significant risk and rewards are transferred to customers, which coincides with
Fund (the Fund), a defined contribution plan. The present value, as at June 30, 2011, of the defined benefit obligation delivery of goods to the customers;
of those employees, who accepted this offer, were transferred to this Fund. Furthermore, from July 2011 onwards,
the monthly contributions to Defined Contribution Pension Fund of such employees were discontinued. - Revenue in respect of services is recognized when the services have been rendered;
3.17.4 Service incentive plan - Income on deposits and other financial assets is recognised on accrual basis;
The Group recognizes provision and an expense under a service incentive plan for certain category of experienced - Commission income is recognised on an accrual basis in accordance with the substance of the relevant agreement;
employees to continue in the Group’s employment. and
- Dividend income on equity investment is recognised when the Group's right to receive the dividend is established.
3.21 Borrowing costs 4.3 Provision for retirement and other service benefits obligations
Borrowing costs are recognised as an expense in the period in which they are incurred except where such costs are The present value of these obligations depend on a number of factors that are determined on actuarial basis using
directly attributable to the acquisition, construction or production of a qualifying asset in which case such costs are various assumptions. Any changes in these assumptions will impact the carrying amount of these obligations. The
capitalized as part of the cost of that asset. Borrowing costs includes exchange differences arising on foreign currency present value of these obligations and the underlying assumptions are disclosed in note 34 respectively.
borrowings to the extent these are regarded as an adjustment to borrowing costs and net gain / loss on the settlement
of derivatives hedging instruments. 4.4 Impairment of goodwill and right to use the brand
3.22 Research and development costs Determining the recoverable value of goodwill and right to use the brand involves use of significant estimates and
assumptions. In making the aforementioned fair valuation estimates discounted cash flow approach is used. The
Research and development costs are charged to consolidated statement of profit or loss as and when incurred. underlying assumptions used for such valuation are disclosed in note 6.1.
3.23 Government grant 5. PROPERTY, PLANT AND EQUIPMENT 2018 2017

--------------Rupees------------
Government grant that compensates the Group for expenses incurred is recognised in the consolidated statement of
profit or loss on a systematic basis in the same period in which the expenses are recognised.
Operating assets at net book value (note 5.1) 64,471,674 65,115,401
3.24 Earnings per share
Capital work in progress (CWIP) (note 5.6) 3,159,249 3,396,331
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Holding Company by the weighted average Major spare parts and stand-by equipment 573,033 411,463
number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects 68,203,956 68,923,195
of all dilutive potential ordinary shares.
3.25 Dividend and appropriation to reserves
Dividend and appropriation to reserves are recognised in the consolidated financial statements in the period in which
these are approved.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates
and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
actual results. Estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are as follows:
4.1 Property, plant and equipment
The Group reviews appropriateness of the rate of depreciation, useful life, residual value used in the calculation of
depreciation. Further where applicable, an estimate of recoverable amount of assets is made for possible impairment
on an annual basis.
4.2 Income taxes
In making the estimates for income taxes, the management considers the applicable laws and the decisions / judgments
of appellate authorities on certain issues in the past. Accordingly, the recognition of deferred taxes is made taking into
account these judgments and the best estimates of future results of operations of the Group.
5.1 Operating assets

Land Building on
Freehold Leasehold Freehold Leasehold Plant and Gas Office
5.3 The details of operating assets disposed / written off during the year are as follows:
(note 5.4) machinery pipeline Catalyst equipment Vehicle Total
------------------------------------------------------------------------Rupees--------------------------------------------------------------------------
As at January 1, 2017
Cost 149,575 187,320 2,722,208 434,711 92,830,745 2,414,963 2,209,022 966,607 366,824 102,281,975
Description and Sold to Cost Accumulated Net book Sale Gain /
Accumulated depreciation - (65,426) (1,163,020) (133,811) (30,359,029) (434,525) (1,881,174) (677,520) (253,246) (34,967,751) method of disposal depreciation value proceeds (Loss)
Net book value 149,575 121,894 1,559,188 300,900 62,471,716 1,980,438 327,848 289,087 113,578 67,314,224 ---------------------------------Rupees---------------------------------
Year ended December 31, 2017
Net book value - January 1, 2017 149,575 121,894 1,559,188 300,900 62,471,716 1,980,438 327,848 289,087 113,578 67,314,224
Vehicle
Transfers from CWIP (note 5.6.1) 6,200 - 104,757 - 2,591,258 - 8,978 129,081 55,332 2,895,606
By Holding Company policy to Ruhail Mohammed 14,267 11,235 3,032 7,800 4,768
Disposals / write offs (note 5.3)
separating executive
Cost - (42,420) - - - - (770,686) (234) (12,701) (826,041)
Accumulated depreciation - 16,014 - - - - 770,686 122 10,827 797,649 Office Equipment

- (26,406) - - - - - (112) (1,874) (28,392)
Depreciation charge (note 5.2) - (4,310) (144,836) (11,004) (4,532,730) (144,016) (113,570) (76,516) (39,055) (5,066,037)
By Holding Company policy to Ruhail Mohammed 1,238 103 1,135 1,104 (31)
separating executive
Reclassification during the year
Cost (2) - (100,632) 5,467 89,941 110,880 (50,162) (55,642) 150 -

Items having net book value
Accumulated depreciation - (105) 173,044 (2,060) (48,223) (181,258) 50,162 8,056 384 - of upto Rs. 500 each
(2) (105) 72,412 3,407 41,718 (70,378) - (47,586) 534 -
Net book value 155,773 91,073 1,591,521 293,303 60,571,962 1,766,044 223,256 293,954 128,515 65,115,401 Office equipment and vehicles Various 34,855 31,752 3,103 19,682 16,579
Cost 155,773 144,900 2,726,333 440,178 95,511,944 2,525,843 1,397,152 1,039,812 409,605 104,351,540
Year ended December 31, 2018 50,360 43,090 7,270 28,586 21,316
Accumulated depreciation - (53,827) (1,134,812) (146,875) (34,939,982) (759,799) (1,173,896) (745,858) (281,090) (39,236,139)
Net book value 155,773 91,073 1,591,521 293,303 60,571,962 1,766,044 223,256 293,954 128,515 65,115,401 Year ended December 31, 2017 826,041 797,649 28,392 704,092 675,700
Transfers from CWIP (note 5.6.1) - - 76,791 - 3,796,585 - 213,900 218,011 224,532 4,529,819 5.4 Asset held for sale
Cost - - - - - - - (10,650) (39,710) (50,360) On February 8, 2018, the Holding Company entered into an Agreement to Sell (the Agreement) with Engro Polymer and
Accumulated depreciation - - - - - - - 8,649 34,441 43,090
Chemicals Limited (EPCL) for sale of land measuring approximately 60 acres situated within Plot No. EZ/I/P-II located
at East Industrial Zone, Port Qasim, Karachi.
- - - - - - - (2,001) (5,269) (7,270)
The land was acquired by the Holding Company through a scheme of arrangement between the Holding Company and
Net book value 155,773 87,679 1,551,651 282,295 59,693,471 1,644,172 349,071 425,260 282,302 64,471,674 the Parent Company (then Engro Chemicals Pakistan Limited) on June 15, 2010. As at the reporting date, the land has
As at December 31, 2018 a net book value of Rs. 30,497.
Cost 155,773 144,900 2,803,124 440,178 99,308,529 2,525,843 1,611,052 1,247,173 594,427 108,830,999
Through the Agreement, the Holding Company has agreed to sell, transfer, convey and assign to EPCL, the rights, free
from all encumbrances, charges, taxes, dues, duties, burdens, disputes, mortgages, ground rent, premium, lis pendis,
Net book value 155,773 87,679 1,551,651 282,295 59,693,471 1,644,172 349,071 425,260 282,302 64,471,674
litigation, liens etc. of any nature whatsoever with vacant peaceful possession and EPCL has agreed to purchase the
Annual rate of depreciation (%) - 2 to 5 2.5 to 10 2.5 5 to 10 5 No. of 10 to 25 12 to 25
said rights for the total consideration of Rs. 720,000.
production
days
The Agreement is subject to approval and issuance of a no dues certificate by the Port Qasim Authority (PQA) in relation
5.2 Depreciation charge for the year has been allocated as follows: 2018 2017 to transfer of rights by the Holding Company to EPCL. Subsequent to year end, the Holding Company has applied PQA
---------Rupees---------- for transfer of the said right.
Cost of sales (note 24) 5,087,585 5,018,362
Selling and distribution expenses (note 25) 67,553 36,188
Administrative expenses (note 26) 11,138 11,487
5,166,276 5,066,037
5.5 Particulars of immovable properties i.e land and building in the name of the Holding Company are as follows: 6.1 Goodwill and Right to use the brand
Location Total area (acreage)
The recoverable amount of cash generating unit is the higher of value in use or fair value less cost to sell. Value in use
Dharki plant & colony 726 is calculated as the net present value of the projected cash flows of the cash generating unit to which the asset
Zarkhez plant land at Port Qasim 172.5 belongs, discounted at risk-adjusted discount rate.
2018 2017
5.6 Capital work in progress -------------Rupees------------ Details relating to the discounted cash flow model used to determine the value in use are as follows:
Plant and machinery 2,758,651 2,987,204 Valuation basis Value in use

Building and civil works including gas pipeline 219,037 215,858
Furniture, fixture and equipment 10,891 31,024 Key assumptions - Sales growth rates
Advances to suppliers 2,374 82,761 - Discount rate
Others 168,296 79,484
3,159,249 3,396,331 Determination of assumptions - Growth rates are internal forecasts based on both internal and
external market information and past performance.
5.6.1 Balance as at January 1 3,396,331 2,443,486
Additions during the year - Cost reflects past experience, adjusted for inflation and expected
4,333,447 3,899,216
Transferred to: changes.
- operating assets (note 5.1) (4,529,819) (2,895,606)
- intangible assets (note 6) (40,710) (50,765) - Discount rate is primarily based on weighted average cost of capital.
Balance as at December 31 3,159,249 3,396,331 Terminal growth rate 2.5%

Period of specific projected cash flows 5 years
6. INTANGIBLE ASSETS Goodwill Right to Software Rights for Discount rate 15.0%
(note 6.1) use the and future gas Total
brand licenses utilization
(note 6.1) The valuation indicates sufficient headroom such that a reasonably possible change to key assumptions is unlikely to
result in an impairment of the related goodwill and right to use the brand.
---------------------------------------Rupees-------------------------------------
6.1.1 Right to use the brand in respect of selling Phosphate fertilizers, acquired under an agreement with the Parent
Cost 183,806 4,170,995 276,748 102,312 4,733,861 Company that has been valued using relief from Royalty Method and is considered to have an indefinite life.
Accumulated amortisation - - (255,047) (28,208) (283,255)
Net book value 183,806 4,170,995 21,701 74,104 4,450,606

2018 2017
Net book value - January 1, 2017 183,806 4,170,995 21,701 74,104 4,450,606 -----------Rupees---------
Transfers from CWIP (note 5.6.1) - - 50,765 - 50,765 6.2 Amortisation for the year has been allocated as follows:
Amortisation (note 6.2) - - (20,786) (5,111) (25,897)
Net book value 183,806 4,170,995 51,680 68,993 4,475,474 Cost of sales (note 24) 15,599 15,700
As at December 31, 2017 Administrative expenses (note 26) 1,284 2,654
Cost 183,806 4,170,995 327,513 102,312 4,784,626 28,413 25,897
Accumulated amortisation - - (275,833) (33,319) (309,152)
Net book value 183,806 4,170,995 51,680 68,993 4,475,474
7. LONG TERM LOANS AND ADVANCES- Considered good
Net book value - January 1, 2018 183,806 4,170,995 51,680 68,993 4,475,474 Executives (notes 7.1, 7.2, 7.3 and 7.5) 195,299 185,974
Transfers from CWIP (note 5.6.1) - - 40,710 - 40,710 Other employees (notes 7.4 and 7.5) 71,488 38,385
Amortisation (note 6.2) - - (23,302) (5,111) (28,413) 266,787 224,359
Net book value 183,806 4,170,995 69,088 63,882 4,487,771
Less: Current portion shown under current assets (note 11) 124,143 89,824
As at December 31, 2018 142,644 134,535
Cost 183,806 4,170,995 368,223 102,312 4,825,336
Accumulated amortization - - (299,135) (38,430) (337,565)
Net book value 183,806 4,170,995 69,088 63,882 4,487,771
9. STOCK-IN-TRADE 2018 2017

7.1 Reconciliation of the carrying amount of loans 2018 2017 ------------Rupees----------
and advances to executives ----------Rupees---------
Raw materials 1,478,579 1,130,508
Balance as at January 1 185,974 177,048 Packing materials 225,849 115,716
Disbursements 155,252 124,247 Work in process 27,517 18,526
Repayments / amortisation (145,927) (115,321) 1,731,945 1,264,750
Balance as at December 31 195,299 185,974 Finished goods:
- manufactured product (note 9.1) 853,481 1,733,036
7.2 Details of loans and advances to executives - purchased and packaged product (note 9.2) 8,982,883 4,638,428
9,836,364 6,371,464
Service incentive loans 148,826 132,863
Less: Provision for net realisable value of raw material (note 9.3) 30,000 -
Advances in respect of : 11,538,309 7,636,214
- Car earn out assistance 12,100 18,671 9.1 Includes stock held with third parties amounting to Nil (2017: Rs. 1,128,105).
- House rent 15,855 15,961
- Retention loan 5,702 10,820 9.2 Includes stock-in-transit amounting to Rs. 612,638 (2017: Rs. 222,742).
- Salary 6,421 7,500 9.3 This represents provision charged in respect of net realisable value of raw material.
- Others 6,395 159
195,299 185,974 10. TRADE DEBTS 2018 2017
7.3 The maximum amount outstanding from executives at the end of any month during the year aggregated to ------------Rupees----------
Considered good
Rs. 208,895 (2017: Rs. 182,219). - Secured (note 10.1) 9,014,194 5,372,171
- Unsecured (note 10.2) 95,477 46,577
7.4 Includes interest free loans given to workers pursuant to Collective Labour Agreement. 9,109,671 5,418,748
7.5 Represents loans granted to employees according to Group's policy. These loans are interest free, are repayable Considered doubtful 18,230 -
within 1 to 4 years and are secured to the extent of the Provident fund balance and retirement benefits, if vested, of 9,127,901 5,418,748
the respective employees. Less: Provision for impairment against trade debts 18,230 -
9,109,671 5,418,748
7.6 The carrying values of the loan and advances are neither past due nor impaired.
10.1 These debts are secured by way of bank guarantee and inland letter of credit.
8. STORES, SPARES AND LOOSE TOOLS 2018 2017
10.2 Includes Rs. 340 (2017: Nil) due from Engro Foods Limited, an associated company.
----------Rupees---------
Consumable stores 579,735 492,698 11. LOANS, ADVANCES, DEPOSITS AND PREPAYMENTS - Considered good
Spares 2018 2017
5,207,235 5,015,871
Loose tools 5,718 4,712 ------------Rupees----------
5,792,688 5,513,281 Current portion of long term loans and advances to
executives and other employees (note 7) 124,143 89,824
Less: Provision for surplus and slow moving items (note 8.1) 467,401 233,487
Advances and deposits 239,984 412,868
5,325,287 5,279,794
Prepayments
8.1 Provision for surplus and slow moving items - Insurance 308,323 210,117
- Others 690,961 444,434
Balance as at January 1 233,487 229,052 1,363,411 1,157,243
Charge for the year, net 233,914 4,435
Balance as at December 31 467,401 233,487
12. OTHER RECEIVABLES 2018 2017 12.4 The maximum amount due from the Parent Company and associated companies at the end of any month during the
-----------Rupees----------- year is as follows:
2018 2017
Subsidy receivable from Government of Pakistan
-----------Rupees-----------
(notes 12.1 and 12.2) 6,368,366 7,323,870 Associated Companies
Sales tax receivable 2,342,694 1,459,450
- Engro Corporation Limited 244,844 -
- Engro Foods Limited 2,480 5,575
Due from associated companies:
- Engro Powergen Qadirpur Limited 21,022 14,187
- Engro Energy Limited 3,795 1,064
- Sindh Engro Coal Mining Company Limited 4,113 1,593
- Engro Polymer & Chemicals Limited 27,630 12,645
- Engro Powergen Thar Limited 1,075 4,210
- Engro Digital Limited 2,239 -
- Engro Vopak Terminal Limited 672 1,787
- Engro Powergen Thar Limited 939 313
- Engro Eximp Agriproducts (Private) Limited 2,530 2,616
- Engro Energy Limited - 98
- Engro Foundation 172 107
- Engro Elengy Terminal (Private) Limited 313 -
- Engro Eximp Agri Products (Private) Limited 496 2,364
- Engro Foundation 11,384 9,326
- Sindh Engro Coal Mining Company Limited 808 939
- Hub Power Services Limited - 591
- Engro Vopak Terminal Limited 502 297
- Hub Power Services Limited - 591
13. SHORT TERM INVESTMENTS
Workers' profits participation fund (note 12.3) 51,434 -
Holding Company
Claims on foreign suppliers 2,225 5,711
Others 1,308 457
Represents investments in Pakistan Investment Bonds and other fixed income placement amounting to Rs. 6,244,613
9,043,657 8,806,842
(2017: Rs. 6,999,436) at interest rates ranging from 10.15% to 10.30% (2017: 6.08% to 6.80%) per annum; and local
currency deposits with various banks amounting to Rs. 90,000 (2017: Rs. 37,000) at interest rate of 9.75% (2017: 5.40%
12.1 During 2015, the Government of Pakistan (GoP) notified payment of subsidy on sold products at the rate of Rs. 500 per
to 6.50%) per annum.
50kg bag of Di Ammonia Phosphate (DAP) and Rs. 217 per 50kg bag of Nitrophos (N) and Nitrogen, Phosphorous and
Potassium (NPK) fertilizers (based on phosphorous content). This subsidy scheme was effective till May 27, 2016.
Subsidiary Companies
During 2016, a new subsidy scheme was announced by the GoP, effective June 25, 2016 whereby subsidy was payable
These represents investment in TDR having value US $10,122 (2017: US $10,231) at interest rate of 3.5% (2017: 2.7%)
on sold products at the rate of Rs. 156 per 50kg bag of Urea and Rs. 300 per 50kg bag of DAP and for Nitrophos 22:20
per annum and have maturity of 12 months (2017: 6 months).
& 18:18 grade (based on phosphorus content) and Nitrogen, Phosphorus and Potassium (NPK) fertilizers (based on
phosphorus content).
14. CASH AND BANK BALANCES 2018 2017
-----------Rupees-----------
During 2017, another subsidy scheme was announced by GOP, effective July 01, 2017. Under the new subsidy scheme
Cash at banks in:
aforementioned rates were replaced with Rs. 100 per 50kg bag for Urea only. This subsidy scheme was effective till June
30, 2018. In line with the notification issued for the said scheme, Ministry of National Food Security and Research has
- deposit accounts (note 14.1) 14,055 7,766
appointed third party auditors for verification of subsidy claims which is underway.
- currrent accounts (note 14.2) 714,581 1,786,963
728,636 1,794,729
12.2 During the year, an amount of Rs. 78,006 was provided for in respect of receivable from GoP. The aggregate provision
in this respect amounts to Rs. 155,127 (2017: Rs. 77,121).
Cash in hand 1,200 1,200
729,836 1,795,929
2018 2017
-----------Rupees-----------
12.3 Workers' profits participation fund
14.1 Deposit accounts carry return at the rate ranging from 5.40% to 8.00% (2017: 4.00%) per annum.
Balance as at January 1 (4,129) (39,099)
Charge for the year (1,149,229) (805,322)
14.2 Includes Rs. 708,803 (2017: Rs. 456,183) held in foreign currency bank accounts.
Interest expense (697) (1,193)
Payments during the year 1,205,489 841,485
Balance as at December 31 51,434 (4,129)
15. SHARE CAPITAL 2018 2017 17. BORROWINGS - Secured (Non-participatory)

-----------Rupees---------
Authorised Capital Installments
1,400,000,000 (2017: 1,400,000,000)
Note Mark - up Number Commenced / 2018 2017
Ordinary shares of Rs. 10 each 14,000,000 14,000,000 rate per annum Commencing from ---------------Rupees--------------
Long term finance utilised
Issued, subscribed and paid-up capital under mark-up arrangements:
258,132,299 (2017: 258,132,299) Ordinary shares of
Rs. 10 each, fully paid in cash 2,581,323 2,581,323 Senior Lenders
Allied Bank Limited 6 months KIBOR + 0.8% 1 bullet payment March 18, 2018 - 2,000,000
9,999,993 (2017: 9,999,993) Ordinary shares of Allied Bank Limited 6 months KIBOR + 0.15% 4 half yearly March 29, 2020 2,000,000 2,000,000
Rs. 10 each issued as at January 1, 2010 Faysal Bank Limited 6 months KIBOR + 1.2% 13 half yearly May 26, 2013 - 499,138
National Bank of Pakistan 17.1 6 Months KIBOR + 0.2% 4 half yearly June 28, 2022 1,000,000 -
on transfer of fertilizer undertaking 100,000 100,000 Deutsche Investitions
und Entwicklungsgesellschaft 17.1 6 Months LIBOR + 3.75% 9 half yearly December 15, 2019 2,082,897 -
1,062,800,000 (2017: 1,062,800,000) Ordinary shares of Allied Bank Limited 17.1 6 Months KIBOR + 0.2% 4 half yearly June 28, 2022 2,100,000 -
Rs. 10 each, issued as fully paid bonus shares 10,628,000 10,628,000 Standard Chartered Bank
(Pakistan) Limited 6 Months KIBOR + 0.9% 13 half yearly June 14, 2013 199,687 398,741
Standard Chartered Bank
4,367,083 (2017: 4,367,083) Ordinary shares of (Pakistan) Limited 6 Months KIBOR + 0.8% 1 bullet payment March 18, 2018 - 1,000,000
Rs. 10 each issued upon exercise of Samba Bank Limited 6 Months KIBOR + 0.9% 14 half yearly April 1, 2013 99,852 199,431
conversion option by International Finance National Bank of Pakistan 6 Months KIBOR + 1.2% 10 half yearly September 28, 2013 - 166,531
Syndicated finance 6 months KIBOR + 0.4% 6 half yearly June 26, 2019 9,109,666 9,108,338
Corporation (IFC) 43,670 43,670 United Bank Limited 6 months KIBOR + 0.15% 4 half yearly March 29, 2020 4,000,000 4,000,000
13,352,993 13,352,993 MCB Bank Limited 6 months KIBOR + 0.80% 1 bullet payment March 18, 2018 - 3,000,000
15.1 Movement in issued, subscribed and paid up capital MCB Bank Limited 6 months KIBOR + 0.15% 4 half yearly March 29, 2020 4,000,000 4,000,000
MCB Bank Limited 17.1 6 months KIBOR + 0.20% 4 half yearly December 29, 2021 3,000,000 -
MCB Bank Limited 6 Months KIBOR + 0.05% 4 half yearly March 28, 2021 1,500,000 1,500,000
2018 2017 2018 2017 Dubai Islamic Bank
----------Number of shares--------- -----------Rupees--------- Pakistan Limited 6 months KIBOR + 0.4% 4 half yearly November 28, 2018 600,000 800,000
1,335,299,375 1,330,932,292 At January 1 13,352,993 13,309,323 Certificates

Ordinary shares of Rs. 10 each Privately Placed Subordinated
Sukuk Certificates 17.3 6 months KIBOR + 1.75% 10 half yearly January 9, 2015 1,118,527 2,231,699
issued upon exercise of 30,810,629 30,903,878
- 4,367,083 conversion option by IFC - 43,670 Less: Current portion shown
1,335,299,375 1,335,299,375 13,352,993 13,352,993 under current liabilities 5,095,584 8,119,864
25,715,045 22,784,014
15.2 As at reporting date, the Parent Company held 56.27% (2017: 56.27%) of the share capital of the Holding Company.
15.3 These fully paid Ordinary shares carry one vote per share and right to dividend.
17.1 During the year, the Holding Company obtained long term finances from MCB Bank Limited, Allied Bank Limited,
16. RESERVES 2018 2017 National Bank of Pakistan and Deutsche Investitions- und Entwicklungsgesellschaft (DEG) amounting to Rs. 3,000,000,
-----------Rupees--------- Rs. 2,100,000, Rs. 1,000,000 and US Dollars 15,000 respectively, to finance the capital expenditure. These borrowings
Capital reserves have the same charge as on the borrowings from other existing Senior Lenders.
Share premium 3,384,904 3,384,904
Exchange revaluation reserves 408,817 83,183 17.2 All senior debts are secured by an equitable mortgage upon immovable property of the Holding Company and equitable
3,793,721 3,468,087 charge over current and future fixed assets excluding immovable property of the Holding Company.
Revenue reserves
Remeasurement of post employment benefits (44,729) (47,315) 17.3 Privately Placed Subordinated Sukuk (PPSS) has a subordinate mortgage upon immovable property of the Holding
Unappropriated profit 28,421,170 25,695,946 Company and a subordinate charge over current and future fixed assets excluding immovable property of the Holding
28,376,441 25,648,631 Company.
32,170,162 29,116,718 17.4 In view of the substance of the transactions, the sale and repurchase of assets under long term finance have not been
recorded in these consolidated financial statements.
17.5 Following are the changes in the long term borrowings for which cash flows have been classified as financing 20. TRADE AND OTHER PAYABLES 2018 2017
activities in the consolidated statement of cash flows: ------------Rupees---------
2018 2017
-------------Rupees-----------
Creditors 4,905,934 4,021,451
Balance as at January 1 30,903,878 34,551,461 Accrued liabilities (note 20.1) 17,117,097 9,887,217
Borrowings availed during the year 8,183,497 1,500,000 Advances from customers 4,174,150 5,270,655
Amortization of transaction cost 10,521 36,499
Repayment of borrowings (8,286,667) (5,085,439) Payable to:
Conversion of IFC loan option - (104,810) - Engro Corporation Limited - 34,654
Exchange (gain) / loss (600) 6,167 - Engro Foods Limited 1,562 1,626
Balance as at December 31 30,810,629 30,903,878 - Engro Energy Limited 2,052 -
18. DEFERRED LIABILITIES - Engro Polymer & Chemicals Limited 202,362 114,486
- Engro Elengy Terminal (Private) Limited 1,373 1,463
Deferred taxation (note 18.1) 7,100,022 9,388,172 - Gratuity Fund - NMPT 151,404 131,832
Deferred income (note 18.2) 61,519 65,384 - Provident Fund 32 9
7,161,541 9,453,556 - Pension Fund 90 -
18.1 Deferred taxation
Deposits / Retention from dealers and contractors (note 20.2) 95,447 35,952
Credit / (Debit) balances arising on account of: Workers' welfare fund (WWF) (note - 20.3) 1,790,523 1,740,268
- Accelerated depreciation allowance 11,187,680 13,467,920 Workers' profits participation fund - 4,129
- Alternative Corporate Tax (3,962,572) (3,962,572) Witholding tax payable 199,923 238,565
- Provision for: Others 428,344 482,221
- staff retirement benefits (1,056) (30,760) 29,071,928 21,966,241
- slow moving stores and spares and doubtful receivables (124,030) (86,416)
7,100,022 9,388,172
20.1 Includes Rs. 12,576,404 (2017: Rs. 6,211,135) on account of Gas Infrastructure Development Cess (GIDC) payable
18.2 Deferred income from October 2016 onwards. The Federal Government challenged the decision of the Sindh High Court (SHC), which
declared the GIDC as ultra vires and unconstitutional in case of another company, and obtained a direction from a
This represents Rs. 96,627 received from Engro Powergen Qadirpur Limited (EPQL), an associated company, for the Larger Bench of SHC suspending the order. However, the Holding Company obtained an injunction / stay order based
right to use the Holding Company's infrastructure facilities at Daharki Plant by the employees of EPQL for a period of on the fact that since the Company is not a party to the case, hence, the suspension is not applicable to the Company's
twenty five years. The amount is being amortised over such period. case. The Government preferred an appeal before the SHC for suspension of the injunction / stay order, hearing of
which is underway. In a separate case, Peshawar High Court passed a judgment on May 31, 2017 validating the new
19. SERVICE BENEFIT OBLIGATION 2018 2017 GIDC Act and the same has been challenged by the petitioners in the Supreme Court of Pakistan.
-------------Rupees-----------
Recently, discussions have been initiated by the Government with the fertilizer industry for the possible settlement of
Service benefit obligation 244,214 225,055 outstanding litigations by the fertilizer industry against GIDC. The structure and legislation of the settlement has not been
Less: Current portion shown under finalized and accordingly no impact in this respect has been recognized in the consolidated financial statements.
current liabilities 51,487 50,271
192,727 174,784 20.2 The amount is kept in separate bank account as per the terms of agreement.
20.3 In 2016, the Supreme Court of Pakistan, through its order dated November 10, 2016 decided that the changes to the
WWF Ordinance, 1971 made through Finance Acts, 2006 and 2008 were ultra vires to the constitution of Pakistan.
However, the taxation authorities had proceeded to file a review petition thereagainst in the Supreme Court of Pakistan,
which is in the process of being heard. Based on the advice of the legal advisor, the aforementioned provision amounting
to Rs. 293,228 has been reversed during the year.
21. SHORT TERM BORROWINGS 22.6 The Holding Company had filed a constitutional petition in the HCS against the Ministry of Petroleum and Natural
Resources (MPNR), Ministry of Industries and Production (MIP) and Sui Northern Gas Pipeline Company Limited
Holding Company (SNGPL) for continuous supply of 100 mmscfd gas per day to the Holding Company's new plant (Enven) and to
prohibit from suspending, discontinuing or curtailing the aforementioned supply. The HCS in its order dated October
The Company has funded facilities for short term finances available from various banks and institutional investors 18, 2011, has ordered that SNGPL should supply 100 mmscfd of gas per day to the Company’s new plant. However,
amounting to Rs. 16,850,000 (2017: Rs. 17,250,000) along with non-funded facilities of Rs. 3,827,000 (2017: five petitions have been filed in the Supreme Court of Pakistan against the aforementioned order of the HCS by
Rs. 3,327,000) for bank guarantees. The rates of markup on funded bank overdraft facilities ranged from 0.2% to SNGPL, MPNR, Agritech Limited, Pak Arab Fertilizers and Kohinoor Mills Limited alongwith twenty one other companies
1.5% per annum over 1-month KIBOR and all the facilities are secured by floating charge upon all present and future (mainly engaged in textile business). The aforementioned petitions are pending for further hearing. The Holding
stocks including raw and packaging materials, finished goods, stores and spares and other merchandise and on all Company’s management, as confirmed by the legal advisor, considers the chances of these petitions being allowed
present and future book debts, outstanding monies, receivable claims and bills of the Company. The Company has to be remote.
utilised Rs.636,878 (2017: Rs. 1,671,732) from funded facilities as at the reporting date.
Further, the Holding Company upon continual curtailment of gas after the aforementioned decision of the HCS has
Subsidiary Company filed an application in respect of Contempt of Court under Article 199 & 204 of the Constitution of Pakistan. The Holding
Company, in the aforementioned application has submitted that SNGPL and MPNR has failed to restore full supply of
The facilities for short term running finances, available from various banks, aggregate to Rs. 14,217,000 (2017: gas to the Holding Company’s plant despite the judgment of the HCS in Holding Company’s favor. A show cause
Rs. 7,900,000). The rates of markup on funded bank overdraft facilities ranged from 0.2% to 1.5% per annum over notice has also been issued against MPNR and SNGPL dated December 31, 2011 by the HCS. The application is
1-month KIBOR. These facilities are secured by floating charge upon all present and future stocks including raw and pending for hearing and no orders have yet been passed in this regard.
packaging materials, finished goods, stores and spares and other merchandise and on all present and future book
debts, outstanding monies, receivable claims and bills of the Holding Company. As at December 31, 2018, the Company 22.7 All Pakistan Textile Processing Mills Association (APTMA), Agritech Limited (Agritech), Shan Dying & Printing Industries
has utilised Rs. 373,090 (2017: Rs. 3,592,496) out of the aforementioned facilities. (Private) Limited and twenty seven others have each contended, through separate proceedings filed before the Lahore
High Court that the supply to the Holding Company’s new plant is premised on the output from Qadirpur gas field
22. CONTINGENCIES AND COMMITMENTS exceeding 500 mmscfd by 100 mmscfd and, therefore, the Gas Sale and Purchase Agreement (GSA) dated April 11,
2007 between the Holding Company and Sui Northern Gas Pipeline Company Limited (SNGPL) be declared void ab
Contingencies initio because the output of Qadirpur gas field has infact decreased. Agritech has additionally alleged discrimination
in that it is receiving less gas than the other fertilizer companies on the SNGPL system. The Holding Company has
22.1 As at December 31, 2018, bank guarantees of Rs.2,982,754 (2017: Rs. 2,430,860) have been issued in favour of out rightly rejected these contentions, and is of the view that it has a strong case for the reasons that (i) 100 mmscfd
third parties. gas has been allocated to the Holding Company through a transparent international competitive bidding process held
by the Government of Pakistan, and upon payment of valuable license fee; (ii) GSA guarantees uninterrupted supply
22.2 Claims, including pending lawsuits, against the Holding Company not acknowledged as debts amount to Rs. 58,680 of gas to the new plant, with right to first 100 mmcfd gas production from the Qadirpur gas field; and (iii) both the
as at December 31, 2018 (2017: Rs. 58,680). Holding Company and the Qadirpur gas field are located in Sindh. Also neither the gas allocation by the Government
of Pakistan nor the GSA predicates the gas supply from Qadirpur gas field producing 100 mmscfd over 500 mmscfd.
22.3 The Holding Company has entered into Dealer Finance Agreements (DFAs) with different banks amounting to No orders have been passed in this regard and the petition has also been adjourned sine die. However, the Holding
Rs. 4,500,000 (2017: Rs. 4,500,000) consequent to which the banks will provide financial assistance to dealers Company’s management, as confirmed by the legal advisor, considers chances of petitions being allowed to be
approved by the Holding Company. In respect to DFA of Rs. 3,000,000 from the banks the Holding Company has remote.
agreed to bear 5% to 10% of the principal in case of default by the dealers.
22.8 The Holding Company in the year 2013 along with other fertilizer companies, received a show cause notice from the
As at December 31, 2018, the banks have made disbursements to dealers under the DFAs amounting to Rs. 1,254,832 Competition Commission of Pakistan (CCP) for initiating action under the Competition Act, 2010 in relation to
(2017: Rs. 1,226,631) maturing on various future dates. unreasonable increase in fertilizer prices. The Company has responded in detail that factors resulting in such increase
were mainly the imposition of infrastructure cess and sales tax and partially the gas curtailment. The CCP has issued
22.4 The Holding Company is contesting a penalty of Rs. 115,631 paid and expensed in the year 1997, imposed by the an order in March 2013, whereby it has held that the Company enjoys a dominant position in the urea market and that
State Bank of Pakistan (SBP) for alleged late payment of foreign exchange risk cover fee on long term loans and has it has abused this position by unreasonable increases of urea prices in the period from December 2010 to December
filed a suit in the High Court of Sindh (HCS). Out of the total penalty Rs. 62,618 was refunded in the year 1999 by the 2011. The CCP has also held another fertilizer company to be responsible for abusing its dominant position. In addition,
SBP, while the recovery of balance amount is dependent on the decision of the HCS. the CCP has imposed a penalty of Rs. 3,140,000 and Rs. 5,500,000 on the Holding Company and other fertilizer
company, respectively. An appeal has been filed in the Competition Appellate Tribunal (CAT) and a writ has been filed
22.5 The Holding Company had commenced two separate arbitration proceedings against the Government of Pakistan in the HCS and stay has been granted against the recovery of the imposed penalty. Hearings have been conducted
for non-payment of marketing incidentals relating to the years 1983-84 and 1985-86. The sole arbitrator in the second at CAT where Farmer Association has filed an internal application.
case has awarded the Holding Company Rs. 47,800, whereas the award for the earlier years is awaited. The award
for the second arbitration was challenged in the HCS. In December 2013, the HCS has upheld the award. However, In case of other fertilizer company, the CAT has transferred the case back to the CCP for reassessment. The Holding
as this can be challenged by way of further appeals, it will be recognised as income on realisation thereof.
Company has challenged the composition of the CAT. The Holding Company's management believes that the 23. NET SALES 2018 2017
chances of ultimate success are very good, as confirmed by legal advisor, hence, no provision has been made in -------------Rupees-----------
this respect. Gross sales:
- manufactured product 67,029,060 54,134,282
22.9 During 2015, the Holding Company received a sales tax order from the tax department for the year ended December - purchased and packaged product 45,766,185 27,848,187
31, 2013 pertaining to discharge of output tax liability, on assumed production of urea amounting to Rs. 402,875 112,795,245 81,982,469
and on presumption that output tax liability is not being discharged by the Holding Company on advances received
from dealers amounting to Rs. 1,844,075. The Holding Company filed an appeal thereagainst with the Commissioner Less: Sales tax 3,598,659 4,853,126
Inland Revenue (Appeals) which decided the matters in favour of the Holding Company. The department thereafter 109,196,586 77,129,343
challenged the decision of the CIR(A) with the Appellate Tribunal Inland Revenue , which is pending to be heard. No 23.1 The above amount includes trade discount amounting to Rs. Nil (2017: Rs. 362).
provision has been made by the Holding Company in this respect.
24. COST OF SALES
22.10 On July 3 2018, the Deputy Commissioner Inland Revenue (DCIR), LTU raised an order for the period June 2016
to July 2017 with a demand of Rs. 1,006,000 mainly on account of further sales tax to be charged on sales to Cost of sales - Manufactured product
unregistered persons. The Holding Company filed an appeal thereagainst with the Commissioner Inland Revenue Raw materials consumed 17,168,622 12,094,227
(Appeals) (CIRA) who disposed off the appeal in favor of the taxation department on September 24, 2018. A Salaries, wages and staff welfare (note 24.1) 2,444,767 2,021,099
constitutional petition against the said order has been filed with the HCS and stay for recovery of demand against Fuel and power 8,083,386 6,639,650
CIRA's order was obtained on October 31, 2018. The Holding Company's management believes that the chances Repairs and maintenance 1,079,238 1,025,019
of ultimate success are very good, as confirmed by legal advisor, hense, no provision has been made in this Depreciation (note 5.2) 5,087,585 5,018,362
respect. Amortisation (note 6.2) 15,599 15,700
Consumable stores 862,533 446,686
22.11 In the year 2017, the High Court of Islamabad in its order dated June 8, 2017 declared that the income derived by Training, HSE and other related expenses 274,783 404,448
M/s Snamprogetti Engineering (the Contractor) from its contract with the Holding Company, is subject to tax as per Purchased services 794,517 523,297
Clause 4 of Article 5 of Double Taxation Treaty between Pakistan and the Netherlands. As per the terms of the Travelling 52,963 52,175
contract, the Holding Company is liable to reimburse the Contractor for any taxes applied to the income of the Communication, stationery and other office expenses 59,144 40,589
Contractor under the contract by the taxation authorities. In respect thereof, the Contractor has preferred an appeal Insurance 418,796 329,605
in the Supreme Court of Pakistan. Rent, rates and taxes 52,638 21,078
Other expenses 21,047 2,576
The management of the Holding Company based on the opinion of its legal counsel, is of the view that the income Manufacturing cost 36,415,618 28,634,511
of the Contractor is exempt from tax under the aforementioned clause of the Double Taxation Treaty and the matter
will be decided in favour of the Contractor and, hence, no provision has been made in this respect. Add: Opening stock of work in process 18,526 30,233
Less: Closing stock of work in process (note 9) (27,517) (18,526)
Cost of goods manufactured 36,406,627 28,646,218
22.12 Commitments 2018 2017 Add: Opening stock of finished goods 1,733,036 5,050,607
------------Rupees----------- Less: Closing stock of finished goods (note 9) (853,481) (1,733,036)
37,286,182 31,963,789
Commitments in respect of capital expenditure Cost of sales - Purchased and packaged product
and other operational items 1,874,155 2,626,904 Opening stock - net of NRV 4,638,428 1,135,905
Add: Purchases during the year 40,938,412 25,449,489
Less: Closing stock - net of NRV (note 9) (8,982,883) (4,638,428)
36,593,957 21,946,966
73,880,139 53,910,755
24.1 Salaries, wages and staff welfare includes Rs. 146,850 (2017: Rs. 130,347) in respect of staff retirement benefits.
25. SELLING AND DISTRIBUTION EXPENSES 2018 2017

26.3 Recipients of donations do not include any donee in which any director or his spouse had any interest except for
-------------Rupees-----------
donation made to Engro Foundation. Mr. Ghias Khan who is a Chairman of the Board of the Holding Company is
also a trustee of Engro Foundation.
Salaries, wages and staff welfare (note 25.1) 950,964 668,445
Training, HSE and other related expenses 153,009 90,246 2018 2017
27. OTHER INCOME
Product transportation and handling 4,756,308 4,655,090 --------------Rupees------------
Royalty 914,263 757,164
Income from sales under Government subsidy (note 12.1) 1,271,334 4,980,288
Repairs and maintenance 7,580 6,510
Advertising and marketing 445,077 319,833
On financial assets
Rent, rates and taxes 381,768 550,039
Income on bank accounts under:
Communication, stationery and other office expenses 25,738 23,433
- shariah permissible arrangements 267 183
Travelling 155,218 82,140
- interest / mark up arrangements 28,228 16,236
Depreciation (note 5.2) 67,553 36,188
Income on Treasury Bills, Term Deposit Certificates and
Amortisation (note 6.2) 11,530 7,543
Pakistan Investment Bonds 465,077 90,609
Purchased services 98,938 21,738
Foreign exchange gain - net 128,196 -
Insurance 35,148 22,821
Others - 1,034
Others 4,821 3,549
621,768 108,062
8,007,915 7,244,739
On non-financial assets
Commission income - 4,154
Gain on disposal of property, plant and equipment (note 5.3) 21,316 675,700
Rental income 40,558 5,045
25.2 Royalty is paid to the Parent Company which has its registered office at 8th floor, The Harbour Front Building, Plot
Scrap sales 12,033 47,577
Number HC-3, Block 4, Scheme Number 5, Clifton, Karachi.
Others (note 27.1) 94,945 45,034
168,852 777,510
2018 2017 2,061,954 5,865,860
26. ADMINISTRATIVE EXPENSES
-------------Rupees----------- 27.1 This includes an amount of Rs. 42,368 charged to the Parent Company.
Salaries, wages and staff welfare (note 26.1) 450,442 432,957
28. OTHER OPERATING EXPENSES
Training, HSE and other related expenses 96,245 41,560
Repairs and maintenance 12,686 15,693
Workers' profits participation fund (note 20.3) 1,149,229 805,322
Workers' welfare fund 143,227 306,022
Research and development 244 31,360
Auditors' remuneration (note 28.1) 8,918 13,733
Legal and professional 51,722 67,572
Others 78,586 10,358
Purchased services 341,544 258,015
1,431,926 1,234,367
Donations (note 26.2) 100,424 83,477
Insurance 1,195 6,882
28.1 Auditors' remuneration
Others 23,320 13,073
1,585,426 1,292,798
Fee for:
- audit of annual financial statements 4,721 3,926
- review of half yearly financial information 555 435
- review of compliance with the Code of Corporate Governance 45 40
26.2 Donations 2018 2017
- certifications, advices and audit of retirement funds 191 850
-------------Rupees-----------
Party wise details of donations in excess of Rs. 500 are given below: - taxation services 2,889 8,017
- reimbursement of expenses 517 465
Name of Donees
8,918 13,733
Engro Foundation 96,000 63,000
National Rural Support Programme 1,000 -
Pakistan Agricultural Coalition 2,100 -
29. FINANCE COST 2018 2017 Company made payment of Rs. 615,600 in respect of ACT for tax year 2014 to maintain its stay granted by the HCS.
---------------Rupees----------- However, in respect of tax years 2015, 2016 and 2017, since no amendments to the returns filed by the Holding Company
Interest / mark-up / return on: were received from the tax department, therefore, suits thereagainst were withdrawn by the Holding Company. Later, on
- long term borrowings under: September 13, 2018, the Holding Company received recovery notice for payment in respect of tax years 2015, 2016
- interest / mark up arrangements 1,589,740 1,869,226 and 2017 against which a constitutional petition has been filed by the Holding Company with the HCS. Stay for recovery
- shariah permissible arrangements 320,552 337,647 of ACT has been granted in respect of the constitutional petition. Any amount payable as ACT can be adjusted against
1,910,292 2,206,873 tax liability of 10 future tax years immediately succeeding the tax year in which it was paid.
- short term borrowings under:
- interest / mark up arrangements 149,087 368,530 30.4 This includes provision for Super Tax of Rs. 352,633 and Rs. 476,641 in respect of tax years 2015 and 2018,
- shariah permissible arrangements 10,931 22,407 respectively, in accordance with section 4B 'Super Tax for rehabilitation of temporarily displaced persons' of the
160,018 390,937 Income Tax Ordinance, 2001 (the Ordinance), whereby, tax at the rate 3% (tax year 2018) and 2% (tax year 2015) is
imposed on specified income of the Holding Company.
Gain on fair value of IFC conversion option - (3,415)
Foreign exchange loss - net - 5,249 The Company had filed a suit in the HCS, contesting Super Tax applicability as unconstitutional and ultravires the laws.
Bank charges 623 26,690 On June 27, 2018, the Supreme Court of Pakistan passed an order requiring that a minimum of 50% of tax calculated
Financial charges on issuance of letters of credit - 21,440 by the taxation authorities be deposited with the taxation authorities to maintain / entertain a suit filed / to be filed with
2,070,933 2,647,774 any Court of Pakistan. Pursuant to this, the legal suits filed against applicability of Super tax were withdrawn by the
Holding Company.
30. TAXATION
Subsequent to the year end, on January 15, 2019, the Holding Company received recovery notice from Federal Board
Current of Revenue (FBR) for payment of Super Tax in respect of tax year 2018. The Holding Company has filed a constitutional
- for the year 8,243,535 5,355,437 petition against the same in the High Court of Sindh and stay thereagainst has been generated. Adequate provision for
- for prior years (note 30.4 and 30.5) 914,354 (1,752,308) super tax for the respective tax year is being maintained in these consolidated financial statements.
9,157,889 3,603,129
30.5 This includes Rs. 200,196 in respect of prior year taxes of EAPL withheld at source at the time of imports of inventories
Deferred (2,289,206) 1,906,019 under section 148 of the Income Tax Ordinance and sold during the year ended December 31, 2018.
6,868,683 5,509,148
This also includes amount of Rs. 85,080 on account of provision in accordance with section 4B 'Super Tax for
rehabilitation of temporarily displaced persons' of the Income Tax Ordinance, 2001 (the Ordinance) whereby tax at the
30.1 During the year 2015, the income tax department amended the assessment filed by the Holding Company for tax year
rate 3 percent is payable on specified income exceeding Rs. 500,000 for the year ended December 31, 2017.
2014. The Holding Company filed an appeal before the Commissioner Inland Revenue (Appeals) against the disallowances,
Subsequent to year end, EAPL received a notice for payment of super tax for the year ended December 31, 2017.
which mainly pertained to exchange gain and loss, loss on derivative and losses purchased from Engro Eximp Agriproducts
EAPL has proceeded with filing a constitutional petition thereagainst in the High Court of Sindh contesting the applicability
(Private) Limited, an associate, under section 59B of the Income Tax Ordinance, 2001 resulting in additions to taxable
of super tax and a stay order restraining recovery of aforesaid amount has been granted.
income of Rs. 3,191,963. In addition the tax department raised demand for the Alternative Corporate Tax through the same
order, for which the Holding Company specifically obtained a stay order. The hearing of the aforesaid appeal was held on
30.6 As a result of demerger in the year 2009, all pending tax issues of the then Parent Company, Engro Chemical Pakistan
October 15, 2018 before the CIR(A) where written arguments were submitted by the Commissioner and the case has
Ltd. had been transferred to the Holding Company. Major issues pending before the taxation authorities are described
been reserved for order.
below:
30.2 During the year 2014, the income tax department amended the assessment filed by the Holding Company for tax years
In previous years, the taxation department had filed reference applications in the HCS against the below-mentioned
2010 and 2011.The Holding Company filed appeals thereagainst before the Appellate Tribunal Inland Revenue (ATIR)
ATIR’s decisions in Holding Company’s favor. No hearing has been conducted to-date. The reference application
against the said disallowances, which through its decision provided relief in respect of certain items and confirmed certain
includes the following matters:
disallowances in favor of the tax department. The said disallowances included the charge in respect of exchange gain
and loss incurred for tax year 2010 and tax year 2011, and loss on derivative for tax year 2011 raising a demand in respect
● Group Relief (Financial year 2006 to 2008): Rs. 1,500,847
of these years in aggregate of Rs. 1,075,466. The Holding Company had challenged the said decision before the High
Court of Sindh, which is pending to be heard, however, the Holding Company is confident of a favourable outcome.
● Inter-Corporate Dividend (Financial year 2007 to 2008): Rs. 336,500
30.3 The Holding Company had filed a suit in the High Court of Sindh (HCS), contesting both the retrospective and prospective
● G.P. Apportionment (Financial years 1995 to 2002): Rs. 653,000
application of the Alternative Corporate Tax (ACT) under section 113C. On January 27, 2018, the Supreme Court of
Pakistan passed an order requiring that a minimum of 50% of tax calculated by the taxation authorities be deposited with
The Holding Company is confident that all the aforementioned pending issues will eventually be decided in its favor.
taxation authorities to maintain / entertain a suit filed / to be filed with any Court of Pakistan. Pursuant to this, the Holding
Therefore, no provision in respect of this is being maintained in these consolidated financial statements.
30.7 As a result of merger of Engro Eximp (Private) Limited (EXIMP) with the Holding Company, all pending tax issues of 30.11 Tax Provision of the Subsidiary Company
EXIMP have been transferred to the Company. Major pending issue pertains to exercise of option to be taxed under
the Normal Tax Regime (NTR) by EXIMP for the years 2012 and 2013, resulting in an aggregate refund of Rs. 796,000. The Subsidiary Company has tax provision in it’s financial statements of Rs. 850,804 for year ended 2017, whilst the
The tax department had not accepted the said treatment for tax year 2013, however, the matter was decided in favor tax assessed for the year is Rs. 850,804. Management has assessed that the tax provisions in the financial statements
of the Holding Company by the Commissioner Income Tax Appeals(CIT(A)), against which the tax department has filed are sufficient.
an appeal with the Appellate Tribunal. However, during the year, the department has given Appeal Effect order to the
aforementioned favourable decision of the CIT(A) for tax year 2013. The management is confident for a favorable 31. EARNINGS PER SHARE (EPS)
outcome on this case and therefore no provision is being maintained in these consolidated financial statements in this
respect. 31.1 Basic EPS has been calculated by dividing the profit attributable to equity holders of the Holding Company by weighted
average number of ordinary shares in issue during the year.
30.8 Relationship between tax expense and accounting profit
As at December 31, 2018, there is no dilutive effect on the basic earnings per share of the Holding Company. Earnings
The tax on the Holding Company's profit before tax differs from the theoretical amount that would arise using the per share is based on following:
Holding Company's applicable tax rate as follows:
2018 2017 2018 2017
--------------Rupees----------- --------------Rupees-----------
Profit before taxation 24,282,201 16,664,770 Profit for the year 17,413,518 11,155,622
Tax calculated at the rate of 29% (2017: 30%) 7,041,838 4,999,431 Add
Depreciation not deductible for tax purposes 7,660 34,040 - Interest on IFC loan - net of tax - 588
- Gain on revaluation of conversion options on IFC
Tax effect of: loan - net of tax - (2,225)
- Expenses not allowed for tax 243,501 332,883
- Final Tax Regime 422,219 (218,317) Profit used for the determination of Diluted EPS 17,413,518 11,153,985
Effect of:
- Tax credits (267,040) (70,236)
- Recoupable minimum turnover tax - 2,178,308 ----Numbers (in thousands)----
- Prior year tax charge 914,354 (1,752,308)
- Incremental tax charge for Super Tax 554,703 - Weighted average number of ordinary shares at
- Change in deferred tax liability rates due to reduction in tax rates (note 30.9) (2,048,552) - beginning of the year 1,335,299 1,330,932
- Others - 5,347
Tax charge for the year 6,868,683 5,509,148 Add: Weighted average adjustments for shares issued during
the year under conversion of option - 3,482
30.9 Through Finance Act 2018, corporate tax rates for year ended December 31, 2018 and onwards were reduced by 1%
for each subsequent tax year uptil tax year 2023 (financial year ending December 31, 2022). This represents amount Weighted average number of shares for
of deferred tax expense relating to changes in tax rates. determination of basic / diluted EPS 1,335,299 1,334,414
30.10 Tax Provision of the Holding Company
The Holding Company carries tax provision in it’s unconsolidated financial statements of Rs. 3,675,656, Rs. 2,757,986
and Rs. 4,704,830, respectively, for the years ended 2015, 2016 and 2017, whilst the tax assessed for these years is
Rs. 775,822, Rs. 448,753 and Rs. 1,877,149, respectively. Management has assessed that the tax provisions in these
consolidated financial statements are sufficient.
32 FINANCING STRUCTURE / MODE 2018 2017 33.2 The Holding Company also provides vehicles and certain household items for use of some executives and directors.
---------------Rupees-----------
Conventional mode: 33.3 Premium charged in respect of directors' indemnity insurance policy, purchased by the Holding Company during the
year, amounted to Rs. 295 (2017: Rs. 381).
Assets
Short term investments 7,739,231 8,161,442 34. RETIREMENT AND OTHER SERVICE BENEFITS
Cash and bank balances 589,906 1,703,338
8,329,137 9,864,780 34.1 Salient features
Liabilities
Long term borrowings 27,892,415 26,473,438 The Parent Company offers a defined post-employment gratuity benefit to permanent management and non-management
Short term borrowings 941,903 5,264,228 employees. In addition, until June 30, 2005, the Holding Company offered a defined post-employment pension benefit
28,834,318 31,737,666 to management employees in service which has been discontinued and the plan now only covers a handful of retired
Shariah compliant mode: pensioners.
Assets - 2,000 The gratuity and pension funds are governed under the Trusts Act, 1882, Trust Deed and Rules of Fund, Companies
Short term investments 139,930 92,591 Act, 2017, the Income Tax Ordinance, 2001 and the Income Tax Rules, 2002.
Cash and bank balances 139,930 94,591
Responsibility for governance of plan, including investment decisions and contribution schedule lie with Board of Trustees
Liabilities of the Fund.
Long term borrowings 2,918,214 4,430,440
Short term borrowings 68,065 - The Holding Company faces the following risks on account of gratuity and pension funds:
2,986,279 4,430,440
- Final salary risks - The risk that the final salary at the time of cessation of service is greater than what was assumed.
Since the benefit is calculated on the final salary, the benefit amount would also increase proportionately.
33. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
- Asset volatility - Most assets are invested in risk free investments of 3,5 or 10 year SSC’s, RIC’s, DSC’s or
33.1 The aggregate amounts for remuneration, including all benefits, to chief executive, directors and executives of the Group Government Bonds. However, investments in equity instruments is subject to adverse fluctuations as a result of
are given below: change in the market price.
2018 2017
Directors Executives Directors Executives - Discount rate fluctuation - The plan liabilities are calculated using a discount rate set with reference to corporate
bond yields. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset
Chief Others Chief Others
by an increase in the value of the current plans’ bond holdings.
Executive Executive
------------------Rupees------------------ -----------------Rupees------------------
- Investment risks - The risk of the investment underperforming and not being sufficient to meet the liabilities. This
Managerial remuneration risk is mitigated by closely monitoring the performance of investments.
including bonus 73,888 1,300 1,745,893 48,383 - 1,867,936
Retirement benefits funds 10,943 110 186,050 6,794 - 195,070 - Risk of insufficiency of assets - This is managed by making regular contribution to the Fund as advised by the
Other benefits 14 4 54,370 91 - 62,067 actuary.
Fees - 2,050 - - 1,450 -
Total 84,845 3,464 1,986,313 55,268 1,450 2,125,073 - In addition to above, the pension fund exposes the Holding Company to Longevity Risk i.e. the pensioners survive
longer than expected.
Number of persons,
including those who 34.2 Valuation results
worked part of the year 3 7 345 1 5 568
The latest actuarial valuation of the defined benefit plans was carried out as at December 31, 2018, using the Projected
Unit Credit Method. Details of the defined benefit plans are as follows:
Defined Benefit Defined Benefit

Defined Benefit Gratuity Plans - Funded Pension Plan-Funded Defined Benefit Gratuity Plans - Funded Pension Plan-Funded
(Curtailed) (Curtailed)
NMPT MPT NMPT MPT
2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
--------------------------------------Rupees---------------------------------- --------------------------------------Rupees----------------------------------
34.2.1 Consolidated statement of financial 34.2.3 Movement in defined
position reconciliation benefit obligation
Present value of obligation 325,678 296,881 104,068 146,542 24,600 29,156 As at beginning of the year 296,881 238,301 146,542 137,729 29,156 32,132
Fair value of plan assets (176,611) (165,049) (136,832) (186,223) (38,104) (40,713) Current service cost 16,364 12,754 5,325 5,745 - -
Deficit / (surplus) of funded plans 149,067 131,832 (32,764) (39,681) (13,504) (11,557) Interest cost 26,217 18,947 10,116 10,978 2,384 2,413
Benefits paid during the year (10,576) (19,835) (56,559) (6,444) (4,042) (3,920)
Payable to Defined Contribution Gratuity Liability in respect of promotion out (2,337) (441) - - - -
Fund - - 9,736 9,736 - - Remeasurments charged
Payable in respect of inter-transfers - - 46 46 - - to OCI (note 34.2.7) (871) 47,155 (1,356) (1,466) (2,898) (1,469)
Unrecognised asset - - - - 13,504 11,557
As at end of the year 325,678 296,881 104,068 146,542 24,600 29,156
Net liability / (asset) at end of the year 149,067 131,832 (22,982) (29,899) - -
34.2.4 Movement in fair value of
34.2.2 Movement in net liability / (asset) plan assets
recognised
At beginning of the year 165,049 168,767 186,223 165,178 40,713 44,213
Net liability / (asset) at beginning of the year 131,832 69,534 (29,899) (17,667) - - Expected return on plan assets 14,811 13,499 13,080 13,091 3,354 3,343
Actual contribution paid by the employer - - - - - 79 Benefits paid during the year (10,576) (19,835) (56,559) (6,444) (4,042) (3,920)
Charge / (Income) for the year 27,770 18,202 2,361 3,632 - (930) Remeasurments charged
to OCI (note 34.2.7) 7,327 2,618 (5,912) 14,398 (1,921) (2,844)
Remeasurements charged to OCI Actual contribution by the
(note 34.2.7) (8,198) 44,537 4,556 (15,864) - 851 employer - - - - - (79)
Unrecognised asset (2,337) (441) - - - - As at end of the year 176,611 165,049 136,832 186,223 38,104 40,713
Net liability / (asset) at end of the year 149,067 131,832 (22,982) (29,899) - - 34.2.5 Charge / (reversal) for the year
Current service cost 16,364 12,754 5,325 5,745 - -

Net interest cost 11,406 5,448 (2,963) (2,113) - (930)
27,770 18,202 2,362 3,632 - (930)
34.2.6 Actual return on plan assets 23,111 14,491 8,242 8,617 2,254 2,221
Defined Benefit 34.2.10 Sensitivity Analysis

Defined Benefit Gratuity Plans - Funded Pension Plan-Funded
(Curtailed) The impact of 1% change in following variables on defined benefit obligation is as follows:
NMPT MPT
2018 2017 2018 2017 2018 2017 Increase in assumption Decrease in assumption
--------------------------------------Rupees---------------------------------- Gratuity Funds Gratuity Funds
Pension Pension
34.2.7 Remeasurement recognised in consolidated NMPT MPT Fund NMPT MPT Fund
statement of other comprehensive income
-------------------------------------Rupees------------------------------------
(Gain) / Loss from change in
experience assumptions (2,115) 51,080 (1,356) (115) 2,636 (161) Discount rate 297,748 101,157 23,517 357,743 107,182 25,788
Loss / (Gain) from change in financial Long Terms Salary Increases 357,743 107,153 - 297,280 101,132 -
assumptions 1,244 (3,925) - (1,351) (5,534) (1,308) Logn Terms Pension Increases - - 25,933 - - 23,374
Remeasurement of obligation (871) 47,155 (1,356) (1,466) (2,898) (1,469) 34.2.11 Maturity Profile
Gratuity Funds
Expected return on plan assets 14,811 13,499 13,079 13,091 3,354 3,343 Time In Years NMPT MPT Pension Fund
Actual return on plan assets (23,111) (14,491) (8,242) (8,617) (2,254) (2,221) -------------------------Rupees-----------------------
Difference in fair value opening 973 (1,626) 1,075 (18,872) 821 1,722 1 26,136 54,186 4,013
2 24,026 4,281 4,013
Remeasurement of plan assets (7,327) (2,618) 5,912 (14,398) 1,921 2,844 3 18,210 7,109 4,013
4 19,841 10,437 4,013
Effect of asset ceiling - - - - 1,947 (524) 5-10 242,569 92,582 4,013
(8,198) 44,537 4,556 (15,864) 970 851 11-15 510,995 20,289 4,013
16-20 1,022,457 1,745 4,013
34.2.8 Principal actuarial assumptions 20+ 2,406,656 - 4,013
used in the actuarial valuation
Weighted average duration (years) 8.58 2.80 5.82
Discount rate 13.3% 8.8% 12.8% 7.8% 12.8% 8.8%

Expected per annum rate of return Defined Benefit Gratuity Plans - Funded Defined Benefit Pension
on plan assets 13.3% 8.0% 12.8% 8.0% 12.8% 8.8% NMPT MPT* Plan - Funded (Curtailed)
Expected per annum rate of increase
in salaries - next year 12.3% 7.8% 12.8% 7.8% - - 2018 2018 2018
34.2.12 Plan assets comprise of
Expected per annum rate of increase in the following: Rupees (%) Rupees (%) Rupees (%)
salaries-long term 12.3% 7.8% 12.8% 7.8% - -
Fixed income instruments 139,280 79 121,988 89 29,264 77
Investment in equity instruments 33,434 19 42,491 31 6,850 18
34.2.9 Demographic Assumptions Cash 3,897 2 4,122 3 1,990 5
Other liabilities - - (31,769) (23) - -
Mortality rate SLIC SLIC SLIC PMA-PFA
(2001-05) - I (2001-05) - I (2001-05) - I (80) - 2 176,611 100 136,832 100 38,104 100
Rate of employee turnover Light Heavy - -
* The employees of the Parent Company in respect of gratuity are members of Defined Benefit Gratuity Fund maintained
and funded by the Parent Company. Accordingly, the above information is based upon the plan assets of Engro
Corporation Limited Gratuity Fund.
34.2.13 The expected return on plan assets was determined by considering the expected returns available on the assets
underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption
yields as at the reporting date.
2018 2017
34.2.14 Expected future cost / (reversal) for the year ending December 31, 2019 is as follows: 35.1 Working capital changes ------------Rupees----------
Rupees
(Increase) / Decrease in current assets
- Gratuity Fund - NMPT 37,071 - Stores, spares and loose tools (279,407) (397,555)
- Stock-in-trade (3,932,095) (837,199)
- Gratuity Fund - MPT (785) - Trade debts (3,709,153) 2,166,564
- Loans, advances, deposits and prepayments (5,274) (277,936)
- Pension Fund (1,621) - Other receivables (236,815) (1,817,157)
(8,162,744) (1,163,283)
34.2.15 Historical information of staff retirement benefits:
Decrease in trade and other payables 7,105,687 6,966,501
2018 2017 2016 2015 2014 (1,057,057) 5,803,218
-------------------------------Rupees--------------------------------
36. CASH AND CASH EQUIVALENTS
Gratuity Fund - NMPT
Present value of defined benefit obligation 325,678 296,881 238,301 228,376 166,212 Cash and bank balances (note 14) 729,836 1,795,929
Fair value of plan assets (176,611) (165,049) (168,767) (169,638) (178,713) Short term investments with original maturity
Deficit / (surplus) 149,067 131,832 69,534 58,738 (12,501) less than 3 months (note 13) 1,494,618 3,164,006
Short term borrowings (note 21) (1,009,968) (5,264,228)
Gratuity Fund - MPT 1,214,486 (304,293)
Present value of defined benefit obligation 104,068 146,542 137,729 149,332 135,336
Fair value of plan assets (136,832) (186,223) (165,178) (166,957) (140,235)
Surplus (32,764) (39,681) (27,449) (17,625) (4,899) 37. FINANCIAL INSTRUMENTS BY CATEGORY
Pension Fund Financial assets as per statement of financial position

Present value of defined benefit obligation 24,600 29,156 32,132 33,367 34,406
Fair value of plan assets (38,104) (40,713) (44,213) 40,835 (38,824) - Loans and receivables at amortised cost
Surplus (13,504) (11,557) (12,081) (7,468) (4,418) Loans, advances and deposits 364,127 502,692
Trade debts 9,109,671 5,418,748
Other receivables 6,700,963 7,347,392
34.3 Defined contribution plans Accrued income 37,276 24,833
An amount of Rs. 226,016 has been charged during the year (2017: Rs. 197,220) in respect of defined contribution 16,941,873 15,089,594
plans maintained by the Parent Company. - Available for sale
Short term investments 6,244,613 4,999,436
35. CASH GENERATED FROM OPERATIONS 2018 2017
--------------Rupees------------
- Held to maturity
Profit before taxation 24,282,201 16,664,770 Short term investments 1,494,618 3,164,006
Adjustment for non-cash charges and other items: Financial liabilities as per statement of financial position
Depreciation (note 5.2) 5,166,276 5,066,037
Amortisation - net 24,548 22,032 - Financial liabilities at amortised cost
Gain on disposal of property, plant and equipment (note 5.3) (21,316) (675,700) Long term borrowings 30,810,629 30,903,878
Provision for retirement and other service benefits 68,496 64,561 Trade and other payable 22,907,332 14,712,624
Income on deposits / other financial assets (493,572) (108,062) Short term borrowings 1,009,968 5,264,228
Finance cost (note 29) 2,070,933 2,647,774 Accrued interest / mark-up 425,920 595,441
Provision for net realisable value of raw materials (note 9) 30,000 - 55,153,849 51,476,171
Provision for surplus and slow moving stores and spares (note 8) 233,914 4,435
Provision for impairment against trade debts (note 10) 18,230 -
Working capital changes (note 35.1) (1,057,057) 5,803,218
30,322,653 29,489,065
38. FINANCIAL RISK MANAGEMENT The Group is exposed to a concentration of credit risk on its trade debts by virtue of all its customers being
agri-based businesses in Pakistan. However, this risk is mitigated by applying individual credit limits and by
38.1 Financial risk factors securing the majority of trade debts against bank guarantees and inland letter of credit.
The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and The credit risk arising on account of acceptance of these bank guarantees is managed by ensuring that the
other price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on having cost bank guarantees are issued by banks of reasonably high credit ratings as approved by the management.
efficient funding as well as to manage financial risk to minimize earnings volatility and provide maximum return to
shareholders. The Group monitors the credit quality of its financial assets with reference to historical performance of such
assets and available external credit ratings. The carrying values of financial assets which are neither past due
Risk management is carried out by the Group's Finance and Planning department under policies approved by the nor impaired are as under:
Management Committee. 2018 2017
------------Rupees-----------
a) Market risk
Loans, advances and deposits 364,127 502,692
i) Currency risk Trade debts 9,109,671 5,418,748
Other receivables 6,700,963 7,347,392
Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because Short term investments 6,244,613 4,999,436
of changes in foreign exchange rates. Cash and bank balances 729,836 1,795,929
23,149,210 20,064,197
This exists due to the Group's exposure resulting from outstanding import payments, foreign currency loan
liabilities and related interest payments. A foreign exchange risk management policy has been developed
The credit quality of receivables can be assessed with reference to their historical performance with no or negligible
and approved by the management. The policy allows the Group to take currency exposure for limited periods
within predefined limits while open exposures are rigorously monitored. The Group ensures to the extent defaults in recent history. The credit quality of Group's bank balances and short term investments can be assessed
possible that it has options available to manage exposure, either through forward contracts, options or with reference to recent external credit ratings as follows:
prepayments, etc. subject to the prevailing foreign exchange regulations. Rating
Rating Agency Short Term Long Term
As at December 31, 2018, if exchange rates had been 1% higher / lower with all other variables held constant,
post tax profit for the year would have been lower / higher by Rs. 14,793. Allied Bank Limited PACRA A1+ AAA
Askari Bank Limited PACRA A1+ AA+
ii) Interest rate risk Bank Alfalah Limited PACRA A1+ AA+
Bank Al Habib Limited PACRA A1+ AA+
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because Bank Islami Pakistan Limited PACRA A1 A+
of changes in market interest rates. The Group's interest rate risk arises from long-term borrowings and The Bank of Punjab PACRA A1+ AA
short-term investments. Borrowing are benchmarked to variable rates which expose the Group to cash flow Albaraka Bank (Pakistan) Limited PACRA A1 A
interest rate risk, whereas short-term investment are fixed rate placements and expose the Company to fair Citi Bank N.A. MOODY'S P1 A1
value interest rate risk. Dubai Islamic Bank (Pakistan) Limited JCR-VIS A1 AA-
Faysal Bank Limited PACRA A1+ AA
The Group analyses its interest rate exposure on a regular basis by monitoring interest rate trends to Habib Bank Limited JCR-VIS A1+ AAA
Habib Metropolitan Bank Limited PACRA A1+ AA+
determine whether they should enter into hedging alternatives.
JS Bank Limited PACRA A1+ AA-
MCB Bank Limited PACRA A1+ AAA
As at December 31, 2018, if interest rates had been 1% higher / lower with all other variables held constant, Meezan Bank Limited JCR-VIS A1+ AA+
post tax profit for the year would have been lower / higher by Rs. 318,206. National Bank of Pakistan PACRA A1+ AAA
Samba Bank Limited JCR-VIS A1 AA
b) Credit risk Silk Bank Limited JCR-VIS A2 A-
Soneri Bank Limited PACRA A1+ AA-
Credit risk represents the risk of financial loss being caused if counter party fails to discharge an obligation. Standard Chartered Bank (Pakistan) Limited PACRA A1+ AAA
Summit Bank Limited JCR-VIS A1 A-
Credit risk arises from deposits with banks and financial institutions, trade debts, loans, advances, deposits, United Bank Limited JCR-VIS A1+ AAA
bank guarantees and other receivables. The credit risk on liquid funds is limited because the counter parties are HSBC Bank Middle East MOODY'S P-2 A3
banks with a reasonably high credit rating or mutual funds which in turn are deposited in banks and government CIMB Bank Berhud MOODY'S P-2 A3
securities. The Group maintains an internal policy to place funds with commercial banks and mutual funds of Habib Bank Limited MOODY'S NP Caa1
asset management companies having a minimum short term credit rating of A1 and AM3 respectively. However, United Bank Limited MOODY'S NP Caa1
the Group maintains operational balances with certain banks of lower rating for the purpose of effective collection Mashreq Bank MOODY'S P2 B aa2
of bank guarantees and to cater to loan disbursements. Noor Bank Fitch F2 A-
c) Liquidity risk 38.3 FAIR VALUE ESTIMATION
Liquidity risk represents the risk that the Group will encounter difficulties in meeting obligations associated with Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the
financial liabilities. principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price)
regardless of whether that price is directly observable or estimated using another valuation technique.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities. Due to dynamic nature of the business, As at December 31, 2018, all financial assets and financial liabilities are carried at amortised cost except for investment
the Group maintains flexibility in funding by maintaining committed credit lines available. in Pakistan Investment Bonds which are carried at their fair values.
The Group's liquidity management involves projecting cash flows and considering the level of liquid assets The carrying value of all financial assets and liabilities reflected in the consolidated financial statements approximate their
necessary to meet these, monitoring statement of financial position liquidity ratios against internal and external fair values. The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the
regulatory requirements and maintaining debt financing plans. inputs used in making the measurements. The fair value hierarchy has the following levels:
The table below analyses the Group's financial liabilities into relevant maturity groupings based on the remaining - Quoted prices (unadjusted) in active markets for identical assets or liabilities (level1);
period at the reporting date to contractual maturity dates. The amounts disclosed in the table are the contractual
undiscounted cash flows. - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices) (level 2); and
2018 2017 - Inputs for the asset or liability that are not based on observable market data (level 3).
Maturity Maturity Maturity Maturity The table below analyses financial instruments carried at fair value by valuation method.
upto after Total upto after Total
one year one year one year one year
Level 1 Level 2 Level 3 Total
---------------------Rupees------------------- ---------------------Rupees-------------------
Financial liabilities ----------------------------Rupees-----------------------------
Assets
Trade and other payables 22,907,332 - 22,907,332 14,712,624 - 14,712,624
Accrued interest / mark-up 425,920 - 425,920 595,441 - 595,441 Short term investments
Long term borrowings 5,095,584 25,715,045 30,810,629 8,119,864 22,784,014 30,903,878 Available for sale - 6,244,613 - 6,244,613
Short term borrowings 1,009,968 - 1,009,968 5,264,228 - 5,264,228
29,438,804 25,715,045 55,153,849 28,692,157 22,784,014 51,476,171
Level 2 - The fair valued financial instruments comprise of Pakistan Investment Bonds which are valued using discounted
cash flow model.
There were no transfers amongst the levels during the year.

38.2 Capital risk management
The Group's objective when managing capital are to safeguard the Group's ability to continue as a going concern in
order to provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure 38.4 Fair value of financial assets and liabilities
to reduce the cost of capital. The Group manages its capital structure and makes adjustments to it in the light of
changes in economic conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair values.
to shareholders or issue new shares.
The total long term borrowings to equity ratio as at December 31, 2018 based on total long term borrowings of Rs.
30,810,629 (2017: Rs. 30,903,878) and total equity of Rs. 45,685,676 (2017: Rs. 42,469,711) was 40%:60% (2017:
42%:58%).
The Group finances its operations through equity, borrowings and management of working capital with a view to
maintaining an appropriate mix between various sources of finance to minimize risk.
39. TRANSACTIONS WITH RELATED PARTIES 39.2 Related parties comprises of Parent Company, associated companies and other companies with common director,
retirement benefits funds, directors and key management personnel.
39.1 Following are the names of associated companies, undertakings and other related parties with whom the Group had
entered into transactions or had agreements and arrangements in place during the year: Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in
these financial statements, are as follows:
2018 2017
Name of Related parties Direct shareholding Relationship
----------Rupees-----------
Engro Corporation Limited 56.27% Parent Company Parent Company

Efert Agritrade (Private) Limited 100% Subsidiary Company Dividend paid 8,264,433 6,010,496
Engro Eximp FZE 100% Subsidiary Company Purchases and services 408,698 249,670
Dawood Lawrencepur Limited N/A Associate of Parent Company Services provided to Parent Company 52,128 32,106
Engro Digital Limited N/A Subsidiary of Parent Company Reimbursements made:
Engro Elengy Terminal (Private) Limited N/A Subsidiary of Parent Company - by the Company 118,061 83,989
Engro Eximp Agriproducts (Private) Limited N/A Subsidiary of Parent Company - to the Company 513,455 7,575
Engro Foods Limited N/A Associate of Parent Company Expenses incurred on behalf of the Company 14,106 -
Engro Foundation N/A Associate of Parent Company Use of assets - 499
Engro Polymer & Chemicals Limited N/A Subsidiary of Parent Company
Engro Energy Limited N/A Subsidiary of Parent Company Associated companies
Engro Powergen Qadirpur Limited N/A Subsidiary of Parent Company Purchases and services 99,219 134,989
Engro Powergen Thar Limited N/A Subsidiary of Parent Company Sale of products 340 2,645
Engro Vopak Terminal Limited N/A Associate of Parent Company Services provided 106,259 112,782
Sindh Engro Coal Mining Company Limited N/A Associate of Parent Company Reimbursements made:
Aasim Butt N/A Key Management Personnel - by the Company 15,838 17,295
Amir Iqbal N/A Key Management Personnel - to the Company 61,159 77,517
Asad Said Jafar N/A Director Payment of mark-up on TFCs and repayment of principal amount 1,025 9,016
Atif Kaludi N/A Key Management Personnel Donation 96,000 63,000
Asif Sultan Tajik N/A Key Management Personnel Use of assets - 2,706
Asim Murtaza Khan N/A Director
Fahd Khawaja N/A Key Management Personnel Contribution to staff retirement benefits
Imran Ahmed N/A Key Management Personnel Pension fund 17,759 18,881
Javed Akbar N/A Director Gratuity fund 119,773 97,020
Mohammad Azhar Malik N/A Key Management Personnel Provident fund 134,265 112,471
Mohsin Ali Mangi N/A Key Management Personnel
Mudassar Yaqub Rathore N/A Key Management Personnel Dividend paid to staff retirement benefits
Muhammad Majid Latif N/A Key Management Personnel Pension fund 1,438 18,881
Nadir Salar Qureshi N/A Chief Executive Gratuity fund 3,607 97,020
Ruhail Mohammed N/A Former Chief Executive Provident fund 7,068 112,471
Sadia Khan N/A Director
Syed Shahzad Nabi N/A Key Management Personnel Others
Engro Corporation Limited DC Pension Fund N/A Post Employement Benefits Remuneration of key management personnel 269,019 215,406
Engro Corporation Limited MPT Gratuity Fund N/A Post Employement Benefits
Engro Corporation Limited NMPT Gratuity Fund N/A Post Employement Benefits
Engro Corporation Limited DB Pension Fund N/A Post Employement Benefits
Engro Corporation Limited DC Gratuity Fund N/A Post Employement Benefits
Engro Corporation Limited Provident Fund N/A Post Employement Benefits
40. PRODUCTION CAPACITY 45. CORRESPONDING FIGURES
45.1 Corresponding figures and balances have been rearranged and reclassified, wherever necessary, for the purpose of
Disigned annual capacity Actual production Remarks comparison, the effects of which are not material.
Metric Tons Metric Tons
45.2 Under the Companies Act, 2017 the definition of 'executives' has been revised. As a result, comparative figures have
2018 2017 2018 2017 been restated to reflect the said change.
Urea plant I & II 2,275,000 2,275,000 1,928,080 1,806,977 Production 46. DATE OF AUTHORISATION FOR ISSUE
planned as per
NPK plant 100,000 100,000 132,790 109,059 market demand These consolidated financial statements were authorised for issue on February 8, 2019 by the Board of Directors of the
Holding Company.
41. NUMBER OF EMPLOYEES
Number of employees Average number of employees
as at December 31, as at December 31,
2018 2017 2018 2017

Factory Employees
Management employees 221 221 223 230

Non-management employees 521 518 500 517
Other than Factory employees

Non-management employees 9 9 9 9
1,252 1,201 1,231 1,185
42. PROVIDENT FUND
The employees of the Group participate in the Provident Fund maintained by the Parent Company. The investments out
of the provident funds have been made in accordance with the provisions of Section 218 of the Companies Act, 2017
and the conditions specified there under.
43. SEASONALITY
The Group's fertilizer business is subject to seasonal fluctuations as a result of two different farming seasons viz, Rabi
(from October to March) and Kharif (from April to September). On an average fertilizer sales are more tilted towards Rabi
season. The Group manages seasonality in the business through appropriate inventory management.
44. NON-ADJUSTING EVENT AFTER THE REPORTING DATE
The Board of Directors in its meeting held on February 8, 2019 has proposed a final cash dividend of Rs. 3 per share
for the year ended December 31, 2018 amounting to Rs. 4,005,898 for approval of the members at the Annual General
Meeting to be held on March 28, 2019. The amount of total dividend is calculated at the number of shares outstanding
as at December 31, 2018.
standalone
financials
independent auditor’s report
Following are the key audit matters:
To the members of Engro Fertilizers Limited S.No. Key audit matters How the matter was addressed in our audit
Report on the Audit of the Financial Statements 1. First time application of Fourth Schedule to the
Companies Act, 2017
Opinion (Refer note 3.1.2 to the financial statements)
We have audited the annexed financial statements of Engro Fertilizers Limited (the Company), which comprise the statement The Fourth Schedule to the Companies Act, 2017 Our audit procedures amongst others included the following:
of financial position as at December 31, 2018, and the statement of profit or loss, the statement of comprehensive income, became applicable to the Company for the first time
the statement of changes in equity, the statement of cash flows for the year then ended, and notes to the financial for the preparation of annual financial statements. - reviewing and obtaining understanding of the
statements, including a summary of significant accounting policies and other explanatory information, and we state that requirements of the Fourth Schedule to the Companies
we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for As part of transition to the requirements, management Act, 2017;
the purposes of the audit. performed an analysis to identify differences between
the previous and current Fourth Schedules and as a - considering the management’s process of identifying
In our opinion and to the best of our information and according to the explanations given to us, the statement of financial result certain amendments relating to presentation and the additional disclosures required in the Company’s
position, the statement of profit or loss, the statement of comprehensive income, the statement of changes in equity and disclosures were made in the financial statements. annexed financial statements;
the statement of cash flows together with the notes forming part thereof conform with the accounting and reporting
standards as applicable in Pakistan and give the information required by the Companies Act, 2017 (XIX of 2017), in the In view of the various new disclosures prepared and - obtaining relevant underlying supports for the additional
manner so required and respectively give a true and fair view of the state of the Company’s affairs as at December presented in the financial statements, we have disclosures and assessed their appropriateness for
31, 2018 and of the profit and other comprehensive , the changes in equity and its cash flows for the year then considered this a key audit matter. sufficient audit evidence; and
ended.
- verifying on a test basis the supporting evidence for the
Basis for Opinion additional disclosures and ensured appropriateness of
the disclosures made.
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the
Financial Statements section of our report. We are independent of the Company in accordance with the International Ethics 2. Income tax and Sales tax
Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered (Refer note 24 and 32 to the financial statements)
Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. The Company has recognized provisions and has Our audit procedures amongst others included the
disclosed contingent liabilities in respect of certain following:
Key Audit Matters income tax and sales tax matters, which are pending
adjudication before various appellate and legal forums. - obtaining and reviewing details of the pending tax
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of matters and discussed the same with the Company’s
the financial statements of the current period. These matters were addressed in the context of our audit of the Provisions and contingencies require management of management;
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these the Company to make judgements and estimates in
matters. relation to the interpretation of laws, statutory rules, - circularizing confirmations to the Company’s external
regulations, and the probability of outcome and legal and tax counsels for their views on matters being
financial impact, if any, on the Company in respect of handled by them;
such provisions and contingencies.
- involving internal tax professionals to assess
Due to significance of amounts involved, inherent management’s conclusions on contingent tax matters
uncertainties with respect to the outcome of these and evaluating the consistency of such conclusions with
matters and use of significant management judgement the views of management and external tax advisors
and estimates to assess the same including related engaged by the Company;
financial
S.No. Key audit matters How the matter was addressed in our audit
S.No. Key audit matters How the matter was addressed in our audit
impacts, we have considered provisions and - reviewing correspondence of the Company with the Therefore, we have considered this as a key audit
contingent liabilities relating to income tax and sales relevant authorities including judgments or orders matter.
tax a key audit matter. passed by the competent authorities in relation to the
issues involved or matters which have similarities with Sales
4.
the issues involved; (Refer note 25 to the financial statements)
- checking mathematical accuracy of the calculations The Company provides its customers with various Our audit procedures amongst others included the
underlying the provisions, if any; and discounts and allowances which are accounted for as following:
a deduction from the gross sales. Further, accruals for
- reviewing the adequacy of the disclosures made by the unsettled amounts in this respect are recognized as - considering the appropriateness of the Company’s
Company with regard to the applicable accounting and at year end. process for making judgements in this area and tested
reporting standards. the design, implementation and operating effectiveness
Certain portion of these discounts and allowances are of controls adopted by management in determining the
not based on achievement of specific criteria, and the accounting for discounts, allowances and other sales
3. Provision in respect of Gas Infrastructure management is required to make certain judgments in deductions;
Development Cess (GIDC) respect of the level of discounts and allowances to be
(Refer note 22.1 to the financial statements) provided to the respective customers. - undertaking a review of the historical accuracy of
judgements by reference to actual discounts paid in
The Company maintains a provision in respect of Gas Our audit procedures amongst others included the Further, there is a presumed risk of sales being prior periods;
Infrastructure Development Cess (GIDC) of Rs. following: overstated resulting from the pressure management
12,576,404 thousand as at December 31, 2018. may feel to achieve performance targets set for the - agreeing a sample of discounts and allowances
- obtaining an understanding of the background facts year. Accordingly, we consider that there is a risk of provided during the year to supporting documentation;
The Company has obtained ad-interim stay orders pertaining to provision recorded in respect of GIDC material misstatement of financial statements relating
against the GIDC Act, 2015 from the Sindh High Court through meetings with the management and review of to transactions occurring close to the year end, as - obtaining supporting documentation for sales
which has restrained the gas supplying companies the minutes of the meetings of those charged with transactions could be recorded in the wrong financial transactions recorded either side of year end to
from charging and / or recovering the cess under the governance; period. determine whether revenue was recognised in the
GIDC Act, 2015 till the final decision on this matter. In correct period;
a separate case, Peshawar High Court passed a - reading correspondence of the Company with the On account of sales being considered as an area
judgment on May 31, 2017 validating the new GIDC regulatory authorities and Company’s external legal involving high level of risk of material misstatement - reviewing and obtaining comfort over the
Act, against which the Company has filed a petition in counsel; therefore significant audit efforts are involved for the management’s internal control processes over revenue
the Supreme Court of Pakistan. verification of the same. Accordingly this has been recognition and validation of appropriate cut-off; and
- obtaining confirmation from external legal counsel in considered to be a key audit matter.
The management believes that the provision recorded respect of the current developments in the case - critically assessing manual journal entries posted to
as at December 31, 2018 in respect of GIDC represents including their assessment of the potential outcome of sales to identify unusual or irregular items.
the management’s current best estimate of the the matter; and
amounts. Given the nature and significance of the
amounts involved in the aforementioned case and the - assessing the adequacy of provisioning based on the
legal forum at which this matter is currently pending, advice of the legal counsel and the appropriateness of
the ultimate outcome and the resultant accounting in related disclosures made in the financial statements in
the financial statements is subject to the exercise of accordance with the accounting and reporting
significant judgement which may change over time as standards.
new facts emerge and the legal case progresses.
Information Other than the Financial Statements and Auditor’s Report Thereon • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Management is responsible for the other information. The other information comprises the information included in the annual
report, but does not include the financial statements and our auditor’s report thereon. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
Our opinion on the financial statements does not cover the other information and we do not express any form of assurance on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
conclusion thereon. to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, report. However, future events or conditions may cause the Company to cease to continue as a going concern.
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether
the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard. We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Responsibilities of Management and Board of Directors for the Financial Statements
We also provide the board of directors with a statement that we have complied with relevant ethical requirements regarding
Management is responsible for the preparation and fair presentation of the financial statements in accordance with the accounting independence, and to communicate them all relationships and other matters that may reasonably be thought to bear on our
and reporting standards as applicable in Pakistan and the requirements of Companies Act, 2017 (XIX of 2017) and for such independence, and where applicable, related safeguards.
internal control as management determines is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error. From the matters communicated with the board of directors, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless circumstances, we determine that a matter should not be communicated in our report because the adverse consequences
management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Board of directors is responsible for overseeing the Company’s financial reporting process. Report on Other Legal and Regulatory Requirements
Auditor’s Responsibilities for the Audit of the Financial Statements Based on our audit, we further report that in our opinion:
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material a) proper books of account have been kept by the Company as required by the Companies Act, 2017 (XIX of 2017);
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan b) the statement of financial position, the statement of profit or loss, the statement of comprehensive income, the statement
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered of changes in equity and the statement of cash flows together with the notes thereon have been drawn up in conformity
material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users with the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;
taken on the basis of these financial statements. c) investments made, expenditure incurred and guarantees extended during the year were for the purpose of the Company’s
business; and
As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgement and maintain
professional skepticism throughout the audit. We also: d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Company
and deposited in the Central Zakat Fund established under section 7 of that Ordinance.
• Identify and asses the risks of material misstatement of the financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide The engagement partner on the audit resulting in this independent auditor’s report is Waqas Aftab Sheikh.
a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal A. F. Ferguson & Co.
control. Chartered Accountants
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal
control.
Karachi
Date: March 6, 2019
statement of financial position
as at december 31, 2018
Note 2018 2017 Note 2018 2017

------------------Rupees---------------- ------------------Rupees----------------
EQUITY & LIABILITIES
ASSETS
Equity
Non-current assets
Share capital 17 13,352,993 13,352,993
Property, plant and equipment 5 68,203,956 68,923,195
Reserves
Intangible assets 6 4,487,771 4,475,474
Share premium 18 3,384,904 3,384,904
Investment in subsidiaries 7 560,416 560,416
Reserve on amalgamation 18 (304,027) (304,027)
Remeasurement of post employment benefits 18 (45,083) (47,669)
Long term loans and advances 8 140,784 134,535
Unappropriated profit 18 26,606,961 24,626,571
73,392,927 74,093,620
29,642,755 27,659,779
TOTAL EQUITY 42,995,748 41,012,772
Current assets
Liabilities
Stores, spares and loose tools 9 5,325,287 5,279,794
Non-current liabilities
Stock-in-trade 10 2,959,696 3,528,439
Borrowings 19 25,715,045 22,784,014
Trade debts 11 2,374,797 3,484,501
Deferred liabilities 20 7,161,541 9,453,556
Service benefits obligations 21 190,531 173,811
Working capital loan to subsidiary 12 13,677,700 2,000,000
33,067,117 32,411,381
Current liabilities
Loans, advances, deposits and
prepayments 13 702,171 701,392
Trade and other payables 22 28,626,619 21,585,098
Accrued interest / mark-up 405,620 543,569
Other receivables 14 8,299,348 8,506,327
Taxes payable 3,203,439 913,246
Current portion of:
Accrued income 439,345 46,911
- borrowings 19 5,095,584 8,119,864
- service benefits obligations 21 51,267 50,271
Short term investments 15 6,334,613 7,036,436
Short term borrowings 23 636,878 1,671,732
Unclaimed dividend 65,672 24,893
Cash and bank balances 16 642,060 1,655,406
38,085,079 32,908,673
40,755,017 32,239,206
TOTAL LIABILITIES 71,152,196 65,320,054
TOTAL ASSETS 114,147,944 106,332,826
Contingencies and Commitments 24
TOTAL EQUITY AND LIABILITIES 114,147,944 106,332,826
The annexed notes from 1 to 48 form an integral part of these financial statements.

statement of profit or loss statement of comprehensive income
(Amounts in thousand except for earnings per share) (Amounts in thousand)
Note 2018 2017 2018 2017

------------------Rupees---------------- ------------------Rupees-----------------

Net sales 25 66,141,478 63,010,060
Cost of sales 26 (38,232,280) (42,538,067)
Items not re-classifiable to Profit or Loss
Gross profit 27,909,198 20,471,993
Remeasurement of post employment benefits obligations 3,642 (30,375)
Selling and distribution expenses 27 (6,367,371) (6,493,239)
Tax relating to remeasurement
Administrative expenses 28 (1,547,226) (1,267,577) of post employment benefits obligations (1,056) 9,706
19,994,601 12,711,177 Other comprehensive income / (loss) for the year, net of tax 2,586 (20,669)
Other income 29 4,877,969 6,074,598
Total comprehensive income for the year 16,671,270 10,115,880
Other operating expenses 30 (1,417,590) (1,230,232)
Finance cost 31 (2,055,153) (2,560,453)
(3,472,743) (3,790,685)
Profit before taxation 21,399,827 14,995,090
Taxation 32 (4,731,143) (4,858,541)
Earnings per share - basic and diluted 33 12.48 7.60
statement of changes in equity statement of cash flows
(Amounts in thousand) Reserves (Amounts in thousand)
Capital Revenue
Share Share Reserve on Remeasurement Unappropriated Total
capital premium amalgamation of post profit Note 2018 2017
employment
Cash Flows From Operating Activities -----------------Rupees----------------
benefits
---------------------------------------------------Rupees-----------------------------------------------
Cash generated from operations 37 34,873,494 33,928,392
Balance as at January 1, 2018 13,352,993 3,384,904 (304,027) (47,669) 24,626,571 41,012,772
Retirement and other service benefits paid (48,862) (46,254)
Transactions with owners Finance cost paid (2,183,181) (2,615,921)
Taxes paid (4,730,156) (3,143,417)
Dividends: Long term loans and advances - net (6,249) (13,898)
- 2nd interim 2018: Rs. 4.00 per share - - - - (5,341,198) (5,341,198) Net cash generated from operating activities 27,905,046 28,108,902
- - - - (14,688,294) (14,688,294)
Total comprehensive income for the Cash Flows From Investing Activities
Profit for the year - - - - 16,668,684 16,668,684 Purchases of property, plant and equipment and intangibles (4,495,017) (3,900,123)
Other comprehensive income: Working capital loan to subsidiary - net (11,677,700) (2,000,000)
- remeasurements, net of tax - - - 2,586 - 2,586 Investment in EFert Agritrade (Private) Limited - (100)
- - - 2,586 16,668,684 16,671,270
Purchase of short term investments (54,211,448) (27,105,991)
Balance as at December 31, 2018 13,352,993 3,384,904 (304,027) (45,083) 26,606,961 42,995,748 Proceeds from sale of short term investments 52,966,271 22,106,555
Proceeds from disposal of property, plant and equipment 5.3 28,586 704,092
Dividends received 1,474,088 52,384
Balance as at January 1, 2017 13,309,323 3,132,181 (304,027) (27,000) 25,172,422 41,282,899
Income on deposits / other financial assets 835,367 59,714
Transactions with owners
Net cash utilised in investing activities (15,079,853) (10,083,469)
Shares issued upon exercise of conversion
option (note 17) 43,670 252,723 - - - 296,393
Dividends:
- Final 2016: Rs. 2.50 per share - - - - (3,338,251) (3,338,251) Proceeds from long term borrowings 8,183,497 1,500,000
- 1st interim 2017: Rs. 2.50 per share - - - - (3,338,251) (3,338,251) Repayments of :
- 2nd interim 2017: Rs. 3.00 per share - - - - (4,005,898) (4,005,898)
- - - - (10,682,400) (10,682,400)
- long term borrowings (8,286,667) (5,085,439)
- short term borrowings - (800,000)
Total comprehensive income for the Dividends paid (14,647,515) (10,677,051)
Profit for the year - - - - 10,136,549 10,136,549

Net cash utilised in financing activities (14,750,685) (15,062,490)
- remeasurements, net of tax - - - (20,669) - (20,669) Net (decrease) / increase in cash and cash equivalents (1,925,492) 2,962,943
- - - (20,669) 10,136,549 10,115,880
Balance as at December 31, 2017 13,352,993 3,384,904 (304,027) (47,669) 24,626,571 41,012,772
Cash and cash equivalents at beginning of the year 2,020,674 (942,269)
Cash and cash equivalents at end of the year 38 95,182 2,020,674
notes to and forming part of the financial statements
for the year ended december 31, 2018
1. LEGAL STATUS AND OPERATIONS 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Engro Fertilizers Limited (‘the Company’) is a public company incorporated in Pakistan on June 29, 2009 as a wholly The significant accounting policies applied in the preparation of these financial statements are set out below. These
owned subsidiary of Engro Corporation Limited (the Holding Company), which is a subsidiary of Dawood Hercules policies have been consistently applied to all the years presented, unless otherwise stated.
Corporation Limited (the Ultimate Parent Company). The Company is listed on Pakistan Stock Exchange Limited (PSX).
3.1 Basis of preparation
The principal activity of the Company is manufacturing, purchasing and marketing of fertilizers. The business units of
the Company include the following: 3.1.1 These financial statements have been prepared under the historical cost convention, except for re-measurement of
certain financial assets and liabilities at fair value through profit or loss and recognition of certain staff retirement
Business Unit Geographical Location benefits at present value.
Head / Registered Office 7th & 8th floors, The Harbour Front Building, Plot Number HC-3, 3.1.2 Statement of compliance
Block 4, Scheme Number 5, Clifton, Karachi.
These financial statements have been prepared in accordance with the accounting and reporting standards as
Engro Daharki Plant District Ghotki, Sindh. applicable in Pakistan. The accounting and reporting standards applicable on the Company comprise of:
Engro Zarkhez Plant EZ/ 1 / P – 1 – II Eastern Zone, Port Qasim, Karachi. - International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB)
as notified under the Companies Act, 2017 (the Act) ; and
2. SUMMARY OF SIGNIFICANT TRANSACTIONS AND EVENTS AFFECTING THE COMPANY'S FINANCIAL POSITION
AND PERFORMANCE DURING THE YEAR - Provisions of and directives issued under the Act.
Following is the summary of significant transactions and events affecting the Company’s financial position and Where provisions of and directives issued under the Act differ from the requirements of IFRSs, the provisions of and
performance during the year: directives issued under the Act have been followed for the preparation and presentation of the financial statements.
2.1 During the year, the Company has incurred capital expenditure amounting to Rs. 4,333,447. Majority of capital 3.1.3 The preparation of financial statements in conformity with the above requirements requires the use of certain critical
expenditure relates to plant and machinery. The said capital expenditure mainly includes expenditure relating to gas accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s
enrichment and compression facilities. These expeditures will enable the Company to enhance plant production and accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and
efficency. estimates are significant to the financial statements are disclosed in note 4.
2.2 The subsidy scheme announced by Government of Pakistan in 2017 was discontinued in June 2018. Further, Rs. 3.1.4 Initial application of a standard, amendment or an interpretation to existing standards
2,227,631 was recovered on account of subsidy. However, Rs. 6,368,366 is still outstanding as disclosed in note 14.1
of these financial statements. a) Standards, amendments to published standards and interpretations that are effective for the year and
are relevant to the Company
2.3 Corporate tax rates for year ended December 31, 2018 and subsequent years were reduced by 1% for each tax year
uptil tax year 2023 . Due to the reduction in current and future corproate tax rates, decrease in deferred tax liability The following interpretation is applicable for the financial year beginning January 1, 2018 and is relevant to the
amounting to Rs. 2,048,552 has been recognized in these financial statements as elaborated in note 32.8. Company:
2.4 The Company has accrued Rs.6,365,269 in lieu of Gas Infrastructure Development Cess during the year, accumulating - IFRIC 22, ‘Foreign currency transactions and advance consideration’ (effective 1 January 2018). This
the total accrual to Rs.12,576,404 as explained in note 22.1. amendment clarifies the determination of the date of transaction for the exchange rate to be used on initial
recognition of a related asset, expense or income where an entity pays or receives consideration in advance
2.5 Subsequent to the enactment of Finance Act 2018, the Company has recognized liability for Super Tax under Section for foreign currency-denominated contracts. For a single payment or receipt, the date of the transaction
4B of the Income Tax Ordinance, 2001 relating to tax years 2018 and 2019 amounting to Rs. 476,641 and Rs. 453,202 should be the date on which the entity initially recognises the non-monetary asset or liability arising from the
respectively as detailed in note 32.4. advance consideration (the prepayment or deferred income/contract liability). If there are multiple payments
or receipts for one item, a date of transaction should be determined as above for each payment or receipt.
The impact of the above amendment is not considered material on the financial statements of the Company.
The other new standards, amendments to published accounting and reporting standards and interpretations that
are mandatory for the financial year beginning on January 1, 2018 are considered not to be relevant or to have
any significant effect on the Company's financial reporting and operations.
b) Standards, amendments to published standards and interpretations that are not yet effective and have 3.2 Property, plant and equipment
not been early adopted by the Company
3.2.1 Owned assets
The following new standards are not effective for the financial year beginning on January 1, 2018 and have not
been early adopted by the Company: These are stated at historical cost less accumulated depreciation and impairment losses, if any, except freehold land
and capital work in progress which are stated at cost. Historical cost includes expenditure that is directly attributable
- IFRS 9, ‘Financial instruments’ (effective for periods beginning on or after July 1, 2018). IFRS 9 addresses to the acquisition of the items including borrowing costs (note 3.22). The cost of self constructed assets includes the
the classification, measurement and recognition of financial assets and financial liabilities and replaces the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition
guidance in IAS 39 “Financial Instruments: Recognition and Measurement” that relates to the classification for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are
and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and located. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
establishes three primary measurement categories for financial assets: amortised cost, fair value through equipment.
other comprehensive income (FVOCI) and fair value through profit or loss (FVPL). The basis of classification
depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Where major components of an item of property, plant and equipment have different useful lives, they are accounted
Investments in equity instruments are required to be measured at fair value through profit or loss with the for as separate items of property, plant and equipment.
irrevocable option at inception to present changes in fair value in OCI not recycling. There is also a new
expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only
liabilities, there were no changes to classification and measurement except for the recognition of changes in when it is probable that future economic benefits associated with the item will flow to the Company and the cost of
own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and
IFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. maintenance are charged to the statement of profit or loss during the financial period in which they are incurred.
It requires an economic relationship between the hedged item and hedging instrument and for the 'hedged
ratio' to be the same as the one management actually uses for risk management purposes. The management Disposal of asset is recognised when significant risk and rewards incidental to ownership have been transferred to
is in the process of assessing the impact this standard will have on the financial statements of the Company. buyers. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognised within ‘Other operating expenses / income’ in the statement of profit or loss.
- IFRS 15, ‘Revenue from contracts with customers’ (effective for periods beginning on or after July 1, 2018).
This standard stipulates clarifications of the guidance on identifying performance obligations, accounting for Depreciation is charged to the statement of profit or loss using the straight line method, except for catalyst whose
License of intellectual property and the principal versus agent assessment (gross versus net revenue presentation). depreciation is charged on the basis of number of production days, whereby the cost of an operating asset less its
New and amended illustrative examples have been added for each of those areas of guidance. The IASB has estimated residual value, if significant, is depreciated over its estimated useful life. Depreciation on addition is charged
also included additional practical expedients related to transition to the new revenue standard. Revenue is from the month following the month in which the asset is available for use and on disposals up to the preceding month
recognised when a customer obtains control of a good or service and thus has the ability to direct the use of disposal.
and obtain the benefits from the good or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contract's and related interpretations. The management is in the process of assessing the impact Depreciation method, useful lives and residual values are reviewed annually.
this standard will have on the financial statements of the Company.
3.2.2 Leased assets
- IFRS 16, ‘Leases’ (effective for periods beginning on or after January 1, 2019). This standard replaces the
current guidance in IAS 17 and is a far reaching change in accounting by lessees in particular. Under IAS 17, Leases in terms of which the Company assumes substantially all the risks and rewards of ownership, are classified
lessees were required to make a distinction between a finance lease (on statement of financial position) and as finance lease. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair
an operating lease (off statement of financial position). IFRS 16 now requires lessees to recognize a lease value and present value of minimum lease payments. Subsequent to initial recognition, the asset is accounted for in
liability reflecting future lease payments and a ‘right-of-use asset’ for virtually all lease contracts. The IASB has accordance with the accounting policy applicable to similar owned asset. Outstanding obligations under the lease
included an optional exemption for certain short-term leases and leases of low-value assets; however, this less finance cost allocated to future periods are shown as a liability.
exemption can only be applied by lessees. For lessors, the accounting stays almost the same. However, as
the IASB has updated the guidance on the definition of a lease (as well as the guidance on the combination Finance cost under lease agreements are allocated to the periods during the lease term so as to produce a constant
and separation of contracts), lessors will also be affected by the new standard. At the very least, the new periodic rate of finance cost on the remaining balance of principal liability for each period.
accounting model for lessees is expected to impact negotiations between lessors and lessees. Under IFRS
16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain
for a period of time in exchange for consideration. The management is in the process of assessing the impact that the Company will obtain ownership by the end of the lease term.
this standard will have on the financial statements of the Company.
There are other amendments to published standards and interpretations that are not yet effective and are also
not relevant to the Company's financial reporting and operations and therefore, have not been presented here.
3.3 Intangible assets for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is
the higher of an asset's fair value less cost to sale and value in use. Reversal of impairment loss is restricted to the
a) Computer Software and licenses original cost of the asset.
Costs associated with maintaining computer software programmes are recognised as an expense when incurred. 3.5 Investment in subsidiary
However, costs that are directly attributable to identifiable software and have probable economic benefits
exceeding the cost beyond one year, are recognised as an intangible asset. Direct costs include the purchase cost Investments in subsidiary companies are initially recognised at cost. These are subsequently measured at cost less
of software (license fee) and related overhead costs. accumulated impairment, if any. Where impairment losses subsequently reverse, the carrying amount of the
investments are increased to the revised amounts but limited to the extent of initial cost of investments. A reversal
Expenditure which enhances or extends the performance of computer software beyond its original specification of impairment loss is recognised as an income.
and useful life is recognised as a capital improvement and added to the original cost of the software.
3.6 Non current assets (or disposal groups) held-for-sale
Computer software and license cost treated as intangible assets are amortised from the date the software is put
to use on a straight-line basis over a period of 4 years. Non-current assets (or disposal groups) are classified as assets held-for-sale when their carrying amount is to be
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower
b) Rights for future gas utilization of carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a sale
transaction rather than through continuing use. Impairment losses on initial classification as held for sale and subsequent
Rights for future gas utilization represent premium paid to the Government of Pakistan for allocation of 100 gains or losses on remeasurement are recognised in the statement of profit or loss.
MMSCFD natural gas for a period of 20 years for Enven plant. The rights are being amortised from the date of
commercial production on a straight-line basis over the remaining allocation period.
3.7 Financial assets
c) Goodwill
3.7.1 Classification
Goodwill represents the difference between the consideration paid for acquiring interests in a business and the fair
The Company classifies its financial assets in the following categories: at fair value through profit or loss, held to
value of the Company's share of its net assets at the date of acquisition and is carried at cost less accumulated
maturity, loans and receivables, and available-for-sale. The classification depends on the purpose for which the
impairment, if any.
financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
d) Right to use the brand
a) At fair value through profit or loss
These are stated at cost less impairment, if any.
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
The carrying values of intangible assets are reviewed for impairment when events or changes in circumstances in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized
indicate that the carrying values may not be recoverable. If any such indication exists, assets or cash generating as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.
units are tested for impairment. Also, goodwill is tested for impairment atleast once a year and other intangibles
with indefinite life are tested for impairment at reporting date. Where the carrying value exceeds the estimated b) Loans and receivables
recoverable amount, these are written down to their recoverable amount and the resulting impairment is charged
to statement of profit or loss. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market. They are included in current assets, except for maturities greater than 12 months after the
Impairment is reversed only if there have been changes in estimates used to determine recoverable amounts and end of the reporting date; which are classified as non-current assets.
only to the extent that the revised recoverable amount does not exceed the carrying values that would have
existed, had there been no recognition of impairment, except impairment of goodwill which is not reversed. c) Held to maturity
The useful lives of intangible assets are reviewed at each reporting date to determine whether events and Held to maturity financial assets are non-derivative financial assets with fixed or determinable payments and fixed
circumstances continue to support an indefinite useful life assessment for the asset. maturity with a positive intention and ability to hold to maturity.
3.4 Impairment of non-financial assets d) Available-for-sale
Assets that are subject to depreciation / amortisation are reviewed at each reporting date to identify circumstances Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified
indicating occurrence of impairment loss or reversal of previous impairment losses. An impairment loss is recognised in any of the other categories. They are included in non-current assets unless the investment matures or
management intends to dispose it off within 12 months of the end of the reporting date.
3.7.2 Recognition and measurement 3.10 Stores, spares and loose tools
Regular purchases and sales of financial assets are recognised on the trade date - the date on which the Company These are valued at weighted average cost except for items in transit which are stated at invoice value plus other
commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs except charges paid thereon till the reporting date. For items which are slow moving and / or identified as surplus to the
for financial assets carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss Company's requirements, adequate provision is made for any excess book value over estimated realisable value.
are initially recognised at fair value, and transaction costs are expensed in the statement of profit or loss. Financial assets The Company reviews the carrying amount of stores and spares on a regular basis and provision is made for
are derecognised when the rights to receive cash flows from the investments have expired or have been transferred obsolescence.
and the Company has transferred substantially all the risks and rewards of ownership. Available-for-sale financial assets
and financial assets at fair value through profit or loss are subsequently carried at fair value. Held to maturity and loans Spare parts of capital nature which can be used only in connection with an item of property, plant and equipment are
and receivables are subsequently carried at amortised cost using the effective interest rate method. shown separately as major spare parts and stand by equipment.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category 3.11 Stock-in-trade
are presented in the statement of profit or loss within ‘other operating income / expenses’ in the period in which they
arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of profit These are valued at the lower of cost and net realisable value. Cost is determined using weighted average method
or loss as part of other income when the Company’s right to receive payments is established. except for raw materials in transit which are stated at cost (invoice value) plus other charges incurred thereon till the
reporting date. Cost in relation to finished goods includes applicable purchase cost and manufacturing expenses. The
Changes in fair value of monetary and non-monetary securities classified as available-for-sale are recognised in the cost of work in process includes material and proportionate conversion costs.
statement of comprehensive income. When securities classified as available-for-sale are sold or impaired, the
accumulated fair value adjustments recognised in statement of comprehensive income are transferred to the Net realisable value signifies the estimated selling price in the ordinary course of business less all estimated costs of
statement of profit or loss. completion and costs necessary to be incurred in order to make the sales.
Interest on available-for-sale securities calculated using the effective interest rate method is recognised in the statement 3.12 Trade debts and other receivables
of profit or loss as part of other income. Dividends on available for sale equity instruments are recognised in the
statement of profit or loss as part of other income when the Company’s right to receive payments is established. These are recognised initially at fair value plus directly attributable transaction costs, if any and subsequently measured
at amortised cost using effective interest rate method less provision for impairment, if any. A provision for impairment
The Company assesses at the end of each reporting date whether there is objective evidence that a financial asset or is established if there is objective evidence that the Company will not be able to collect all amounts due according to
a group of financial assets is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative the original terms of receivables. The amount of provision is charged to statement of profit or loss. Trade debts and
loss is removed from equity and recognised in the statement of profit or loss. Impairment losses recognised in the other receivables considered irrecoverable are written-off.
statement of profit or loss on equity instruments are not reversed through the profit or loss. Impairment testing of trade
debts and other receivables is described in note 3.12. 3.13 Cash and cash equivalents
3.8 Financial liabilities Cash and cash equivalents in the statement of cash flows includes cash in hand, balance with banks, other short-term
highly liquid investments with original maturities of three months or less, and bank overdrafts / short term borrowings.
All financial liabilities are recognised at the time when the Company becomes a party to the contractual provisions of Bank overdrafts are shown within short term borrowings in current liabilities on the statement of financial position.
an instrument. Financial liabilities are extinguished when these are discharged or cancelled or expire or when there
is substantial modification in the terms and conditions of the original financial liability or part of it. The terms are 3.14 Share capital
substantially different if the discounted present value of the cash flows under the new terms, including any fees paid
net of any fees received and discounted using the original effective interest rate, is at least ten percent different from Ordinary shares are classified as equity and recognised at their face value. Incremental costs directly attributable to
the discounted present value of the remaining cash flows of the original financial liability. If modification of terms is the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the
extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred 3.15 Borrowings
adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried
3.9 Offsetting financial instruments at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised
in the statement of profit or loss over the period of the borrowings using the effective interest rate method.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle either on a net Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of
basis, or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent the liability for at least 12 months after the reporting date.
on future events and must be enforceable in the normal course of business and in the event of default, insolvency or
bankruptcy of the Company or the counterparty.
3.16 Trade and other payables All of the aforementioned funds are managed by the Holding Company.
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the 3.18.2 Defined benefit plans
effective interest rate method.
A defined benefit plan is a post-employment benefit plan other than the defined contribution plan. The Company's
These are classified as current liabilities if payment is due within 12 months or less (or in the normal operating cycle net obligation in respect of defined benefit plans is calculated by estimating the amount of future benefit that employees
of the business if longer). If not, they are presented as non-current liabilities. have earned in return for their service in current and prior periods; that benefit is discounted to determine its present
value. The calculation is performed annually by a qualified actuary using the Projected Unit Credit method, related
3.17 Current and deferred income tax details of which are given in note 36 to the financial statements.
The tax expense for the period comprises current and deferred tax. Tax is recognised in the statement of profit or loss, Remeasurements (actuarial gains / losses) in respect of defined benefit plan are recognised directly in equity through
except to the extent that it relates to items recognised in the statement of comprehensive income or directly in equity. other comprehensive income.
In this case the tax is also recognised in the statement of comprehensive income or directly in equity, respectively.
Contributions require assumptions to be made of future outcomes which mainly include increase in remuneration,
Current expected long-term return on plan assets and the discount rate used to convert future cash flows to current values.
Calculations are sensitive to changes in the underlying assumptions.
The current income tax charge is based on the taxable income for the year calculated on the basis of the tax laws
enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
The Company also contributes to:
Deferred
- defined benefit funded pension scheme for its management employees.
Deferred tax is recognised using the balance sheet method, providing for all temporary differences between the
- defined benefit funded gratuity schemes for its management and non-management employees.
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they
reverse, based on the laws that have been enacted or substantively enacted by the reporting date. The pension scheme provides life time pension to retired employees or to their spouses. Contributions are made
annually to these funds on the basis of actuarial recommendations. The pension scheme has been curtailed and
A deferred tax asset is recognised to the extent that is probable that future taxable profits will be available against effective from July 1, 2005, no new members are inducted in this scheme.
which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realised. 3.18.3 In June 2011, the Company gave a one time irrevocable option to selected members of MPT Employees' Defined
Benefit Gratuity Fund and Defined Contribution Pension Fund to join a new MPT Employee's Defined Contribution
3.18 Employee benefits Gratuity Fund (the Fund), a defined contribution plan. The present value, as at June 30, 2011, of the defined benefit
obligation of those employees, who accepted this offer, were transferred to this Fund. Furthermore, from July 2011
3.18.1 Defined contribution plans onwards, the monthly contributions to Defined Contribution Pension Fund of such employees were discontinued.
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contribution into a 3.18.4 Service incentive plan
separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions
to defined contribution plans are recognised as an employee benefit expense in statement of profit or loss when they The Company recognizes provision under a service incentive plan for certain category of experienced employees to
are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future continue in the Company’s employment.
payments is available.
3.18.5 Employees' compensated absences
The Company contributes to:
The Company accounts for compensated absences on the basis of unavailed leave balance of each employee at the
- defined contribution provident fund for its permanent employees. Monthly contributions are made both by the end of the year.
Company and employees to the fund at the rate of 10% of basic salary;
3.19 Provisions
- defined contribution pension fund for the benefit of those management employees who have not opted for
defined contribution gratuity fund as explained in note 3.18.3. Monthly contributions are made by the Company Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events
to the fund at rates ranging from 12.5% to 13.75% of basic salary; and and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation. Provisions are reviewed at each reporting date and adjusted to reflect current
- defined contribution gratuity fund for the benefit of those management employees who have selected to opt out best estimate.
of defined benefit gratuity fund and defined contribution pension plans as explained in note 3.18.3. Monthly
contributions are made by the Company to the fund at the rate of 8.33% of basic salary.
3.20 Foreign currency transactions and translation 3.26 Dividend and appropriation to reserves
These financial statements are presented in Pakistan Rupees, which is the Company’s functional currency. Foreign Dividend and appropriation to reserves are recognised in the financial statements in the period in which these are
currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of approved.
the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year-end exchange rates are 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
recognised in the statement of profit or loss.
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including
3.21 Revenue recognition expectations of future events that are believed to be reasonable under the circumstances. The Company makes
estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the the related actual results. Estimates and assumptions that have a significant risk of causing a material adjustment to
amount of revenue can be measured reliably. Revenue is measured at the fair value of the consideration received or the carrying amounts of assets and liabilities within the next financial year are as follows:
receivable and is reduced for marketing allowances. Revenue is recognised on the following basis:
4.1 Property, plant and equipment
- Sales revenue is recognised when significant risk and rewards are transferred to customers, which concides with
delivery of goods to the customers; The Company reviews appropriateness of the rate of depreciation, useful life, residual value used in the calculation of
depreciation. Further where applicable, an estimate of recoverable amount of assets is made for possible impairment
- Revenue in respect of services is recognized when the services have been rendered;
on an annual basis.
- Income on deposits and other financial assets is recognised on accrual basis;
4.2 Income taxes
- Commission income is recognised on accrual basis in accordance with the substance of the relevant agreement;
and In making the estimates for income taxes, the management considers the applicable laws and the decisions / judgments
of appellate authorities on certain issues in the past. Accordingly, the recognition of deferred taxes is made taking into
- Dividend income on equity investment is recognised when the Company's right to receive the dividend is account these judgments and the best estimates of future results of operations of the Company.
established.
4.3 Provision for retirement and other service benefits obligations
3.22 Borrowing costs
The present value of these obligations depend on a number of factors that are determined on actuarial basis using
Borrowing costs are recognised as an expense in the period in which they are incurred except where such costs are various assumptions. Any changes in these assumptions will impact the carrying amount of these obligations. The
directly attributable to the acquisition, construction or production of a qualifying asset in which case such costs are present value of these obligations and the underlying assumptions are disclosed in note 36.
capitalized as part of the cost of that asset. Borrowing costs includes exchange differences arising on foreign currency
borrowings to the extent these are regarded as an adjustment to borrowing costs. 4.4 Impairment of goodwill and right to use the brand
3.23 Research and development costs Determining the recoverable value of goodwill and right to use the brand involves use of significant estimates and
assumptions. In making the aforementioned fair valuation estimates discounted cash flow approach is used. The
Research and development costs are charged to statement of profit or loss as and when incurred. underlying assumptions used for such valuation are disclosed in note 6.1.
3.24 Government grant 5. PROPERTY, PLANT AND EQUIPMENT 2018 2017

-------------Rupees------------
Government grant that compensates the Company for expenses incurred is recognised in the statement of profit or
loss on a systematic basis in the same period in which the expenses are recognised.
Operating assets at net book value (note 5.1) 64,471,674 65,115,401
3.25 Earnings per share
Capital work in progress (CWIP) (note 5.6) 3,159,249 3,396,331
The Company presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number Major spare parts and stand-by equipment 573,033 411,463
of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable
to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive 68,203,956 68,923,195
potential ordinary shares.
5.1 Operating assets

Land Building on 5.3 The details of operating assets disposed / written off during the year are as follows:
Freehold Leasehold Freehold Leasehold Plant and Gas Office
(note 5.4) machinery pipeline Catalyst equipment Vehicle Total
------------------------------------------------------------------------Rupees--------------------------------------------------------------------------
As at January 1, 2017 Description and Sold to Cost Accumulated Net book Sale Gain /
method of disposal depreciation value proceeds (Loss)
Cost 149,575 187,320 2,722,208 434,711 92,830,745 2,414,963 2,209,022 966,607 366,824 102,281,975
---------------------------------Rupees---------------------------------
Net book value 149,575 121,894 1,559,188 300,900 62,471,716 1,980,438 327,848 289,087 113,578 67,314,224
Vehicle
Net book value - January 1, 2017 149,575 121,894 1,559,188 300,900 62,471,716 1,980,438 327,848 289,087 113,578 67,314,224 By Company policy to Ruhail Mohammed 14,267 11,235 3,032 7,800 4,768
Transfers from CWIP (note 5.6.1) 6,200 - 104,757 - 2,591,258 - 8,978 129,081 55,332 2,895,606 separating executive
Office Equipment
Cost - (42,420) - - - - (770,686) (234) (12,701) (826,041)
Accumulated depreciation - 16,014 - - - - 770,686 122 10,827 797,649

By Company policy to Ruhail Mohammed 1,238 103 1,135 1,104 (31)
- (26,406) - - - - - (112) (1,874) (28,392) separating executive
Reclassification during the year Items having net book value of

Cost (2) - (100,632) 5,467 89,941 110,880 (50,162) (55,642) 150 -
upto Rs. 500 each
Accumulated depreciation - (105) 173,044 (2,060) (48,223) (181,258) 50,162 8,056 384 -
Office equipment and vehicles Various 34,855 31,752 3,103 19,682 16,579
(2) (105) 72,412 3,407 41,718 (70,378) - (47,586) 534 -
Net book value 155,773 91,073 1,591,521 293,303 60,571,962 1,766,044 223,256 293,954 128,515 65,115,401
As at January 1, 2018 Year ended December 31, 2018 50,360 43,090 7,270 28,586 21,316
Cost 155,773 144,900 2,726,333 440,178 95,511,944 2,525,843 1,397,152 1,039,812 409,605 104,351,540
Accumulated depreciation - (53,827)

Year ended December 31, 2017 826,041 797,649 28,392 704,092 675,700
(1,134,812) (146,875) (34,939,982) (759,799) (1,173,896) (745,858) (281,090) (39,236,139)
Net book value 155,773 91,073 1,591,521 293,303 60,571,962 1,766,044 223,256 293,954 128,515 65,115,401
Transfers from CWIP (note 5.6.1) - - 76,791 - 3,796,585 - 213,900 218,011 224,532 4,529,819 5.4 Asset held for sale
Cost - - - - - - - (10,650) (39,710) (50,360) On February 8, 2018, the Company entered into an Agreement to Sell (the Agreement) with Engro Polymer and
Accumulated depreciation - - - - - - - 8,649 34,441 43,090
Chemicals Limited (EPCL), on associated company, for sale of land measuring approximately 60 acres situated within
Plot No. EZ/I/P-II located at East Industrial Zone, Port Qasim, Karachi.
- - - - - - - (2,001) (5,269) (7,270)
The land was acquired by the Company through a scheme of arrangement between the Company and the Holding
Net book value 155,773 87,679 1,551,651 282,295 59,693,471 1,644,172 349,071 425,260 282,302 64,471,674 Company (then Engro Chemicals Pakistan Limited) on June 15, 2010. As at the reporting date, the land has a net
As at December 31, 2018 book value of Rs. 30,497.
Cost 155,773 144,900 2,803,124 440,178 99,308,529 2,525,843 1,611,052 1,247,173 594,427 108,830,999
Through the Agreement, the Company has agreed to sell, transfer, convey and assign to EPCL, the rights, free from
all encumbrances, charges, taxes, dues, duties, burdens, disputes, mortgages, ground rent, premium, lis pendis,
Net book value 155,773 87,679 1,551,651 282,295 59,693,471 1,644,172 349,071 425,260 282,302 64,471,674
litigation, liens etc. of any nature whatsoever with vacant peaceful possession and EPCL has agreed to purchase the
Annual rate of depreciation (%) - 2 to 5 2.5 to 10 2.5 5 to 10 5 No. of 10 to 25 12 to 25 said rights for a total consideration of Rs. 720,000.
production
days
The Agreement is subject to approval and issuance of a no dues certificate by the Port Qasim Authority (PQA) in
5.2 Depreciation charge for the year has been allocated as follows: 2018 2017 relation to transfer of rights by the Company to EPCL. Subsequent to year end, the Company has applied to PQA for
----------Rupees---------- the transfer of the said right.
Cost of sales (note 26) 5,087,585 5,018,362
Administrative expenses (note 28) 11,138 11,487
5,166,276 5,066,037
5.5 Particulars of immovable properties i.e land and building in the name of the Company are as follows:
6.1 Goodwill and Right to use the brand
Location Total area (acreage)
Dharki plant & colony 726 The recoverable amount of cash generating unit is the higher of value in use or fair value less cost to sell. Value in use
Zarkhez plant land at Port Qasim 172.5 is calculated as the net present value of the projected cash flows of the cash generating unit to which the asset belongs,
2018 2017 discounted at risk-adjusted discount rate.
5.6 Capital work in progress ------------Rupees------------
Details relating to the discounted cash flow model used to determine the value in use of goodwill and right to use the
Plant and machinery 2,758,651 2,987,204 brand are as follows:
Building and civil works including gas pipeline 219,037 215,858
Furniture, fixture and equipment 10,891 31,024 Valuation basis Value in use
Advances to suppliers 2,374 82,761
Others 168,296 79,484 Key assumptions - Sales growth rates
3,159,249 3,396,331 - Discount rate
5.6.1 Balance as at January 1 3,396,331 2,443,486 Determination of assumptions - Growth rates are internal forecasts based on both internal and
external market information and past performance.
Additions during the year 4,333,447 3,899,216
Transferred to:
- operating assets (note 5.1) (4,529,819) (2,895,606) - Cost reflects past experience, adjusted for inflation and expected
- intangible assets (note 6) (40,710) (50,765) changes.
Balance as at December 31 3,159,249 3,396,331 - Discount rate is primarily based on weighted average cost of capital.
6. INTANGIBLE ASSETS Goodwill Right to Software Rights for Terminal growth rate 2.5%
(note 6.1) use the and future gas Total Period of specific projected cash flows 5 years
brand licenses utilization
Discount rate 15%
(note 6.1)
---------------------------------------Rupees-------------------------------------
As at January 1, 2017 The valuation indicates sufficient headroom such that a reasonably possible change to key assumptions is unlikely to
result in an impairment of the related goodwill and right to use the brand.
Cost 183,806 4,170,995 276,748 102,312 4,733,861
Accumulated amortisation - - (255,047) (28,208) (283,255) 6.1.1 Right to use the brand in respect of selling Phosphate fertilizers, acquired under an agreement with the Holding Company
Net book value 183,806 4,170,995 21,701 74,104 4,450,606
that has been valued using relief from Royalty Method and is considered to have an indefinite life.
Net book value - January 1, 2017 183,806 4,170,995 21,701 74,104 4,450,606 2018 2017
Transfers from CWIP (note 5.6.1) - - 50,765 - 50,765 -----------Rupees--------
Amortisation (note 6.2) - - (20,786) (5,111) (25,897) 6.2 Amortisation for the year has been allocated as follows:
Net book value 183,806 4,170,995 51,680 68,993 4,475,474
Cost of sales (note 26) 15,599 15,700
As at December 31, 2017 Selling and distribution expenses (note 27) 11,530 7,543
Cost 183,806 4,170,995 327,513 102,312 4,784,626 Administrative expenses (note 28) 1,284 2,654
Accumulated amortisation - - (275,833) (33,319) (309,152) 28,413 25,897
Net book value 183,806 4,170,995 51,680 68,993 4,475,474
Year ended December 31, 2018 7. INVESTMENT IN SUBSIDIARIES

Net book value - January 1, 2018 183,806 4,170,995 51,680 68,993 4,475,474
Transfers from CWIP (note 5.6.1) - - 40,710 - 40,710 Engro Eximp FZE (note 7.1) 560,316 560,316
Amortisation (note 6.2) - - (23,302) (5,111) (28,413) EFert Agritrade (Private) Limited (note 7.2) 100 100
Net book value 183,806 4,170,995 69,088 63,882 4,487,771 560,416 560,416
As at December 31, 2018

Cost 183,806 4,170,995 368,223 102,312 4,825,336
Accumulated amortization - - (299,135) (38,430) (337,565)
Net book value 183,806 4,170,995 69,088 63,882 4,487,771
7.1 Engro Eximp FZE (EEF), was incorporated in United Arab Emirates (UAE) as a wholly owned subsidiary of the Company. 8.3 The maximum amount outstanding from executives at the end of any month during the year aggregated to Rs. 208,895
The registered office of EEF is situated at BCW JAFZA 18 & 19, Office No 110, UAE. The Company has obtained a (2017: Rs. 182,219).
General Trading License issued by Jafza Jebel Ali Free Zone and is engaged in the business of trading agricultural
products. The investment amounts to AED 20,250 as at the reporting date. 8.4 Includes interest free loans given to workers pursuant to Collective Labour Agreement.
As at December 31, 2018, the director of the Company was Ruhail Mohammed. The latest available audited financial 8.5 Represents loans granted to employees according to Company's policy. These loans are interest free, are repayable
statements of the Company have been prepared on going concern basis and the auditor has issued unmodified opinion within 1 to 4 years and are secured to the extent of the Provident fund balance and retirement benefits, if vested, of the
on the same. respective employees.
7.2 EFert Agritrade (Private) Limited (EAPL) was incorporated on July 6, 2017 as a wholly owned subsidiary of the Company 8.6 The carrying values of the loan and advances are neither past due nor impaired.
to carry out trading and distribution of imported fertilizer. As part of the business reorganization in 2017, the Company
transferred its business of trading and distribution of imported fertilizer to EAPL and holds 10,000 ordinary shares of 9. STORES, SPARES AND LOOSE TOOLS 2018 2017
Rs. 10 each in EAPL.
-------------Rupees----------
7.3 No new investment in associated companies and undertakings have been made during the year. Consumable stores 579,735 492,698
Spares 5,207,235 5,015,871
Loose tools 5,718 4,712
8. LONG TERM LOANS AND ADVANCES - Considered good 2018 2017 5,792,688 5,513,281
-----------Rupees---------
Less: Provision for surplus and slow moving items (note 9.1) 467,401 233,487
Executives (notes 8.1, 8.2, 8.3 and 8.5) 193,616 185,974
Other employees (notes 8.4 and 8.5) 70,464 38,385 5,325,287 5,279,794
264,080 224,359
9.1 Provision for surplus and slow moving items
Less: Current portion shown under current assets (note 13) 123,296 89,824
Balance as at January 1 233,487 229,052
140,784 134,535 Charge for the year, net 233,914 4,435
Balance as at December 31 467,401 233,487
8.1 Reconciliation of the carrying amount of loans
and advances to executives
Balance as at January 1 185,974 177,048 10. STOCK-IN-TRADE

Disbursements 148,375 124,247
Repayments / amortisation (140,733) (115,321) Raw materials 1,478,579 1,130,508
Balance as at December 31 193,616 185,974 Packing materials 145,230 115,716
Work in process 27,517 18,526
8.2 Details of loans and advances to executives 1,651,326 1,264,750
Finished goods:
Service incentive loans 147,274 132,863 - manufactured product (note 10.1) 853,481 1,733,036
- purchased and packaged product (note 10.2) 484,889 530,653
Advances in respect of : 1,338,370 2,263,689
- Car earn out assistance 12,100 18,671 Less: Provision for net realisable value of raw material (note 10.3) 30,000 -
- House rent 15,724 15,961 2,959,696 3,528,439
- Retention loan 5,702 10,820
- Salary 6,421 7,500
- Others 6,395 159
193,616 185,974
14. OTHER RECEIVABLES 2018 2017

10.1 Includes stock held with third parties amounting to Nil (2017: Rs. 1,128,105). -----------Rupees-----------
Subsidy receivable from Government of Pakistan
10.2 Includes stock-in-transit amounting to Rs. 32,855 (2017: Rs. 81,688). (notes 14.1 and 14.2) 6,368,366 7,323,870
Sales tax receivable 1,515,209 1,111,093
10.3 This represents provision charged in respect of net realisable value of raw material.
Due from subsidiary company:
11. TRADE DEBTS 2018 2017 - Engro Eximp FZE 56,317 51,451
-----------Rupees----------
Due from associated companies:
Considered good - Engro Corporation Limited 272,283 -
- Secured (note 11.1) 2,320,074 3,441,175 - Engro Polymer & Chemicals Limited 27,630 12,645
- Unsecured (note 11.2) 54,723 43,326 - Engro Digital Limited 2,239 -
2,374,797 3,484,501 - Engro Powergen Thar Limited 939 313
- Engro Energy Limited - 98
Considered doubtful 18,230 - - Engro Foundation 172 107
2,393,027 3,484,501 - Engro Eximp Agri Products (Private) Limited 424 2,364
- Sindh Engro Coal Mining Company Limited 636 939
Less: Provision for impairment against trade debts 18,230 - - Engro Vopak Terminal Limited 502 297
2,374,797 3,484,501 - Hub Power Services Limited - 591
Workers' profits participation fund (note 14.3) 51,434 -

11.1 These debts are secured by way of bank guarantee and inland letter of credit. Claims on foreign suppliers 2,225 2,225
Others 972 334
11.2 Includes Rs. 340 (2017: Nil) due from Engro Foods Limited, an associated company. 8,299,348 8,506,327
WORKING CAPITAL LOAN TO SUBSIDIARY
14.1 During 2015, the Government of Pakistan (GoP) notified payment of subsidy on sold products at the rate of Rs. 500 per
12. 50 kg bag of Di Ammonia Phosphate (DAP) and Rs. 217 per 50 kg bag of Nitrophos (N) and Nitrogen, Phosphorous
Represents unsecured loan given to EAPL amounting to Rs. 13,677,700 (2017: Rs. 2,000,000). The mark up is
and Potassium (NPK) fertilizers (based on phosphorous content). This subsidy scheme was effective till May 27, 2016.
receivable on quarterly basis at the rate of 1 months KIBOR + 0.5%. The amount is receivable on an annual basis.
The loan is repayable by October 18, 2019. During 2016, a new subsidy scheme was announced by the GoP, effective June 25, 2016 whereby subsidy was payable
on sold products at the rate of Rs. 156 per 50kg bag of Urea and Rs. 300 per 50 kg bag of DAP and for Nitrophos
22:20 & 18:18 grade (based on phosphorus content) and Nitrogen, Phosphorus and Potassium (NPK) fertilizers (based
13. LOANS, ADVANCES, DEPOSITS AND PREPAYMENTS - Considered good on phosphorus content).
2018 2017
During 2017, another subsidy scheme was announced by GOP, effective July 01, 2017. Under the new subsidy scheme
-----------Rupees----------
aforementioned rates were replaced with Rs. 100 per 50kg bag for Urea only. This subsidy scheme was effective till
Current portion of long term loans and advances to June 30, 2018. In line with the notification issued for the said scheme, Ministry of National Food Security and
executives and other employees (note 8) 123,296 89,824 Research has appointed third party auditors for verification of subsidy claims which is underway.
14.2 During the year, an amount of Rs. 78,006 was provided for in respect of receivable from GoP. The aggregate
Advances and deposits
provision in this respect amounts to Rs. 155,127 (2017: Rs. 77,121).
204,681 303,576
Prepayments
2018 2017
- Insurance 308,173 210,117
-----------Rupees-----------
- Others 66,021 97,875 14.3 Workers' profits participation fund
702,171 701,392 Balance as at January 1 (4,129) (39,099)
Charge for the year (1,149,229) (805,322)
Interest expense (697) (1,193)
Payments during the year 1,205,489 841,485
Balance as at December 31 51,434 (4,129)
17. SHARE CAPITAL 2018 2017

14.4 The maximum amount due from the Holding Company, subsidiary and associated companies at the end of any
-----------Rupees-----------
month during the year is as follows:
Authorised Capital
2018 2017 1,400,000,000 (2017: 1,400,000,000)
-----------Rupees--------- Ordinary shares of Rs. 10 each 14,000,000 14,000,000
Holding Company
Issued, subscribed and paid-up capital
Subsidiary Companies
Rs. 10 each, fully paid in cash 2,581,323 2,581,323
- EFert Agritrade (Private) Limited 7,602 321
- Engro Eximp FZE 62,640 71,102
Rs. 10 each issued as at January 1, 2010
on transfer of fertilizer undertaking 100,000 100,000
Associated Companies
1,062,800,000 (2017: 1,062,800,000) Ordinary shares of
Rs. 10 each, issued as fully paid bonus shares 10,628,000 10,628,000
- Engro Energy Limited 3,795 1,064
- Sindh Engro Coal Mining Company Limited 4,367,083 (2017: 4,367,083) Ordinary shares of
4,113 1,593
Rs. 10 each issued upon exercise of
- Engro Powergen Thar Limited 1,075 4,210
conversion option by International Finance
- Engro Vopak Terminal Limited 672 1,787
Corporation (IFC) 43,670 43,670
- Engro Eximp Agriproducts (Private) Limited 2,530 2,616
13,352,993 13,352,993
17.1 Movement in issued, subscribed and paid up capital
- Engro Elengy Terminal (Private) Limited 313 -
- Engro Foundation 11,384 9,326
- Hub Power Services Limited - 591 2018 2017 2018 2017
----------Number of Shares----------- -----------Rupees-----------
15. SHORT TERM INVESTMENTS 1,335,299,375 1,330,932,292 At January 1 13,352,993 13,309,323
Ordinary shares of Rs. 10 each
Represents investments in Pakistan Investment Bonds and other fixed income placement amounting to Rs. 6,244,613 issued upon exercise of
(2017: Rs. 6,999,436) at interest rates ranging from 10.15% to 10.30% (2017: 6.08% to 6.80%) per annum; and local - 4,367,083 conversion option by IFC - 43,670
currency deposits with various banks amounting to Rs. 90,000 (2017: Rs. 37,000) at interest rate of 9.75% (2017: 5.40%
1,335,299,375 1,335,299,375 13,352,993 13,352,993
to 6.50%) per annum.
17.2 As at reporting date, the Holding Company held 56.27% (2017: 56.27%) of the share capital of the Company.
16. CASH AND BANK BALANCES 2018 2017
-----------Rupees---------
17.3 These fully paid Ordinary shares carry one vote per share and right to dividend.
Cash at banks in:
- deposit accounts (note 16.1) 14,055 7,766 18. RESERVES 2018 2017
- currrent accounts (note 16.2) 626,805 1,646,440 -----------Rupees-----------
Capital reserves
640,860 1,654,206 Share premium 3,384,904 3,384,904
Reserve on amalgamation (note 18.1) (304,027) (304,027)
Cash in hand 1,200 1,200 3,080,877 3,080,877
642,060 1,655,406 Revenue reserves
Remeasurement of post employment benefits (45,083) (47,669)
16.1 Deposit accounts carry return at rates ranging from 5.40% to 8.00% (2017: 4.00%) per annum. 26,606,961 24,626,571
Unappropriated profit
26,561,878 24,578,902
16.2 Includes Rs. 621,027 (2017: Rs.456,183) held in foreign currency bank accounts. 29,642,755 27,659,779
18.1 This reserve was created upon amalgamation of Engro Eximp (Private) Limited with the Company.
19. BORROWINGS - Secured (Non-participatory) 19.5 Following are the changes in the long term borrowings for which cash flows have been classified as financing
activities in the statement of cash flows:
Installments
2018 2017
Note Mark - up Number Commenced / 2018 2017
------------Rupees----------
rate per annum Commencing from ---------------Rupees--------------
Balance as at January 1 30,903,878 34,551,461
Long term finance utilised
under mark-up arrangements: Borrowings availed during the year 8,183,497 1,500,000
Amortisation of transaction cost 10,521 36,499
Senior Lenders Repayment of borrowings (8,286,667) (5,085,439)
Allied Bank Limited 6 months KIBOR + 0.8% 1 bullet payment March 18, 2018 - 2,000,000 Conversion of IFC loan option - (104,810)
Allied Bank Limited 6 months KIBOR + 0.15% 4 half yearly March 29, 2020 2,000,000 2,000,000
Faysal Bank Limited 6 months KIBOR + 1.2% 13 half yearly May 26, 2013 - 499,138 Exchange (gain) / loss (600) 6,167
National Bank of Pakistan 19.1 6 Months KIBOR + 0.2% 4 half yearly June 28, 2022 1,000,000 - Balance as at December 31 30,810,629 30,903,878
Deutsche Investitions
und Entwicklungsgesellschaft 19.1 6 Months LIBOR + 3.75% 9 half yearly December 15, 2019 2,082,897 - 20. DEFERRED LIABILITIES
Allied Bank Limited 19.1 6 Months KIBOR + 0.2% 4 half yearly June 28, 2022 2,100,000 -
Standard Chartered Bank
(Pakistan) Limited 6 Months KIBOR + 0.9% 13 half yearly June 14, 2013 199,687 398,741 Deferred taxation (note 20.1) 7,100,022 9,388,172
Standard Chartered Bank Deferred income (note 20.2) 61,519 65,384
(Pakistan) Limited 6 Months KIBOR + 0.8% 1 bullet payment March 18, 2018 - 1,000,000 7,161,541 9,453,556
Samba Bank Limited 6 Months KIBOR + 0.9% 14 half yearly April 1, 2013 99,852 199,431
National Bank of Pakistan 6 Months KIBOR + 1.2% 10 half yearly September 28, 2013 - 166,531 20.1 Deferred taxation
Syndicated finance 6 months KIBOR + 0.4% 6 half yearly June 26, 2019 9,109,666 9,108,338
United Bank Limited 6 months KIBOR + 0.15% 4 half yearly March 29, 2020 4,000,000 4,000,000 Credit / (Debit) balances arising on account of:
MCB Bank Limited 6 months KIBOR + 0.80% 1 bullet payment March 18, 2018 - 3,000,000 - Accelerated depreciation allowance 11,187,680 13,467,920
MCB Bank Limited 6 months KIBOR + 0.15% 4 half yearly March 29, 2020 4,000,000 4,000,000
MCB Bank Limited 19.1 6 months KIBOR + 0.20% 4 half yearly December 29, 2021 3,000,000 - - Alternative Corporate Tax (3,962,572) (3,962,572)
MCB Bank Limited 6 Months KIBOR + 0.05% 4 half yearly March 28, 2021 1,500,000 1,500,000 - Provision for:
Dubai Islamic Bank - staff retirement benefits (1,056) (30,760)
Pakistan Limited 6 months KIBOR + 0.4% 4 half yearly November 28, 2018 600,000 800,000 - slow moving stores and spares and doubtful receivables (124,030) (86,416)
Certificates 7,100,022 9,388,172
Privately Placed Subordinated
Sukuk Certificates 19.3 6 months KIBOR + 1.75% 10 half yearly January 9, 2015 1,118,527 2,231,699 20.2 Deferred income
30,810,629 30,903,878
Less: Current portion shown
under current liabilities 5,095,584 8,119,864 This represents Rs. 96,627 received from Engro Powergen Qadirpur Limited (EPQL), an associated company, for the
right to use the Company's infrastructure facilities at Daharki Plant by the employees of EPQL for a period of twenty
25,715,045 22,784,014 five years. The amount is being amortised over such period.
21. SERVICE BENEFITS OBLIGATIONS 2018 2017

19.1 During the year, the Company obtained long term finances from MCB Bank Limited, Allied Bank Limited, National Bank ------------Rupees----------
of Pakistan and Deutsche Investitions- und Entwicklungsgesellschaft (DEG) amounting to Rs. 3,000,000, Rs. 2,100,000,
Service benefits obligations 241,798 224,082
Rs. 1,000,000 and US Dollars 15,000 respectively, to finance the capital expenditure. These borrowings have the same
Less: Current portion shown under
charge as on the borrowings from other existing Senior Lenders.
current liabilities 51,267 50,271
190,531 173,811
19.2 All senior debts are secured by an equitable mortgage upon immovable property of the Company and equitable charge
over current and future fixed assets excluding immovable property of the Company.
19.3 Privately Placed Subordinated Sukuk (PPSS) has a subordinate mortgage upon immovable property of the Company
and a subordinate charge over current and future fixed assets excluding immovable property of the Company.
19.4 In view of the substance of the transactions, the sale and repurchase of assets under long term finance have not been
recorded in these financial statements.
(Amounts in thousand)
22. TRADE AND OTHER PAYABLES 2018 2017

------------Rupees---------
Creditors 4,603,937 3,243,843

Accrued liabilities (note 22.1) 16,508,193 9,760,343
Advances from customers 4,071,104 5,098,627
Payable to:
- Engro Energy Limited 2,052 -
- Engro Polymer & Chemicals Limited 202,362 114,486
- Engro Elengy Terminal (Private) Limited 1,373 1,463
- EFert Agritrade (Private) Limited 732,166 786,298
- Gratuity Fund - NMPT 151,404 131,832
- Provident Fund 32 9
- Pension Fund 90 -
Deposits / Retention from dealers and contractors (note 22.2) 89,947 35,952
Workers' welfare fund (WWF) (note 22.3) 1,790,523 1,740,268
Workers' profits participation fund (note 14.3) - 4,129
Witholding tax payable 41,896 165,000
Others 428,343 499,509
28,626,619 21,585,098
22.1 Includes Rs. 12,576,404 (2017: Rs. 6,211,135) on account of Gas Infrastructure Development Cess (GIDC) payable
from October 2016 onwards. The Federal Government challenged the decision of the Sindh High Court (SHC), which
declared the GIDC as ultra vires and unconstitutional in case of another company, and obtained a direction from a Larger
Bench of SHC suspending the order. However, the Company obta vined an injunction / stay order based on the fact that
since the Company is not a party to the case, hence, the suspension is not applicable to the Company's case. The
Government preferred an appeal before the SHC for suspension of the injunction / stay order, hearing of which is underway.
In a separate case, Peshawar High Court passed a judgment on May 31, 2017 validating the new GIDC Act and the
same has been challenged by the petitioners in the Supreme Court of Pakistan.
Recently, discussions have been initiated by the Government with the fertilizer industry for the possible settlement of
outstanding litigations by the fertilizer industry against GIDC. The structure and legislation of the settlement has not been
finalized and accordingly no impact in this respect has been recognised in the financial statements.
22.2 The amount is kept in separate bank account as per the terms of agreements and is not utilisable for the purpose
of the business.
22.3 In 2016, the Supreme Court of Pakistan, through its order dated November 10, 2016 decided that the changes to the
WWF Ordinance, 1971 made through Finance Acts, 2006 and 2008 were ultra vires to the constitution of Pakistan.
However, the taxation authorities had proceeded to file a review petition thereagainst in the Supreme Court of Pakistan,
which is in the process of being heard. Based on the advice of the legal advisor, the aforementioned provision amounting
to Rs. 293,228 has been reversed during the year.
25. NET SALES 2018 2017 27. SELLING AND DISTRIBUTION EXPENSES 2018 2017
--------------Rupees------------ -------------Rupees-----------
Gross sales:
- manufactured product 67,029,060 54,134,282 Salaries, wages and staff welfare (note 27.1) 950,964 668,445
- purchased and packaged product 1,547,430 13,178,764 Training, HSE and other related expenses 153,009 90,246
68,576,490 67,313,046 Product transportation and handling 3,122,913 3,925,965
Royalty (note 27.2) 914,263 757,164
Less: Sales tax 2,435,012 4,302,986 Repairs and maintenance 7,580 6,510
66,141,478 63,010,060 Advertising and marketing 445,077 319,833
25.1 The above amount includes trade discount amounting to Nil (2017: Rs. 362). Rent, rates and taxes 374,619 527,735
26. COST OF SALES Travelling 155,218 82,140
Cost of sales - Manufactured product Amortisation (note 6.2) 11,530 7,543
Raw materials consumed 17,168,622 12,094,227 Purchased services 98,938 21,738
Salaries, wages and staff welfare (note 26.1) 2,444,767 2,021,099 Insurance 35,148 22,750
Fuel and power 8,083,386 6,639,650 Others 4,821 3,549
Repairs and maintenance 1,079,238 1,025,019 6,367,371 6,493,239
Depreciation (note 5.2) 5,087,585 5,018,362
Amortisation (note 6.2) 15,599 15,700 27.1 Salaries, wages and staff welfare includes Rs. 61,554 (2017: Rs. 49,388) in respect of staff retirement benefits.
Consumable stores 862,533 446,686
Training, HSE and other related expenses 274,783 404,448 27.2 Royalty is paid to the Holding Company which has its registered office at 8th floor, The Harbour Front Building, Plot Number
Purchased services 794,517 523,297 HC-3, Block 4, Scheme Number 5, Clifton, Karachi.
28. ADMINISTRATIVE EXPENSES 2018 2017
-------------Rupees-----------
Insurance 418,796 329,605
Rent, rates and taxes 52,638 21,078 Salaries, wages and staff welfare (note 28.1) 415,961 411,923
Other expenses 21,047 2,576 Training, HSE and other related expenses 96,245 41,560
Manufacturing cost 36,415,618 28,634,511 Repairs and maintenance 12,686 15,693
Add: Opening stock of work in process 18,526 30,233 Communication, stationery and other office expenses 56,410 41,670
Less: Closing stock of work in process (note 10) (27,517) (18,526) Travelling 24,063 20,393
Cost of goods manufactured 36,406,627 28,646,218 Depreciation (note 5.2) 11,138 11,487
Add: Opening stock of finished goods 1,733,036 5,050,607 Purchased services 341,544 258,015
Less: Closing stock of finished goods (note 10) (853,481) (1,733,036) Donations (note 28.2) 100,424 83,477
37,286,182 31,963,789 Insurance 1,195 6,882
Others 23,320 13,073
Cost of sales - Purchased and packaged product 1,547,226 1,267,577
Opening stock - net of NRV 530,653 1,157,051
Add: Purchases during the year 900,334 9,947,880 28.1 Salaries, wages and staff welfare includes Rs. 47,774 (2017: Rs. 38,389) in respect of staff retirement benefits.
Less: Closing stock - net of NRV (note 10) (484,889) (530,653)
946,098 10,574,278 28.2 Donations 2018 2017
38,232,280 42,538,067 -------------Rupees-----------
Party wise details of donations in excess of Rs. 500 are given below:
26.1 Salaries, wages and staff welfare includes Rs. 146,850 (2017: Rs. 130,347) in respect of staff retirement benefits. Name of Donees
Engro Foundation 96,000 63,000
National Rural Support Programme 1,000 -
Pakistan Agricultural Coalition 2,100 -
28.3 Recipients of donations do not include any donee in which any director or his spouse had any interest except for
donation made to Engro Foundation. Mr. Ghias Khan who is a Chairman of the Board of the Company is also a 30.1 Auditors' remuneration 2018 2017
trustee of Engro Foundation. --------------Rupees------------
Fee for:
29. OTHER INCOME 2018 2017
- audit of annual financial statements 2,375 2,150
-------------Rupees------------
- review of half yearly financial information 480 435
Income from sales under Government subsidy (note 14.1) 1,271,334 4,980,288 - review of compliance with the Code of Corporate Governance 45 40
- certifications, advices and audit of retirement funds 191 850
On financial assets - taxation services 2,889 8,017
Income on bank accounts under: - reimbursement of expenses 417 465
- shariah permissible arrangements 267 183 6,397 11,957
- interest / mark up arrangements 28,228 16,236
Income on working capital loan to subsidiary company 771,326 22,078 31. FINANCE COST
Income on Treasury Bills, Term Deposit Certificates and
Pakistan Investment Bonds 427,980 64,500 Interest / mark-up / return on:
Dividend income (note 29.1) 1,474,088 52,384 - long term borrowings under:
Foreign exchange gain 128,196 - - interest / mark up arrangements 1,589,740 1,869,226
Others - 1,034 - shariah permissible arrangements 320,552 337,647
2,830,085 156,415 1,910,292 2,206,873
On non-financial assets - short term borrowings under:
Commission income (note 29.2) 607,698 198,348 - interest / mark up arrangements 140,773 334,588
Gain on disposal of property, plant and equipment (note 5.3) 21,316 675,700 - shariah permissible arrangements 4,088 22,407
Rental income 40,558 5,045 144,861 356,995
Scrap sales 12,033 47,577 Gain on fair value of IFC conversion option - (3,415)
Others (note 29.3) 94,945 11,225 2,055,153 2,560,453
776,550 937,895
4,877,969 6,074,598 32. TAXATION
29.1 This comprises of dividend income received from EAPL and EEF amounting to Rs. 1,405,000 (2017: Nil) and Rs. 69,088 Current
(2017: Rs. 52,384), respectively. - for the year 6,191,075 4,704,830
- for prior years (note 32.4) 829,274 (1,752,308)
29.2 Represents commission earned as a selling agent of imported fertilizer on behalf of EAPL. 7,020,349 2,952,522
29.3 This includes an amount of Rs. 42,368 charged to the Holding Company. Deferred (2,289,206) 1,906,019
4,731,143 4,858,541
30. OTHER OPERATING EXPENSES 2018 2017

32.1 During the year 2015, the income tax department amended the assessment filed by the Company for tax year 2014.
-------------Rupees------------
The Company filed an appeal before the Commissioner Inland Revenue (Appeals) against the disallowances, which
mainly pertained to exchange gain and loss, loss on derivative and losses purchased from Engro Eximp Agriproducts
Workers' profits participation fund (note 14.3) 1,149,229 805,322
(Private) Limited, an associate, under section 59B of the Income Tax Ordinance, 2001 resulting in additions to taxable
Workers' welfare fund 143,227 306,022
income of Rs. 3,191,963. In addition the tax department raised demand for the Alternative Corporate Tax through the
Research and development 244 31,360
same order, for which the Company specifically obtained a stay order. The hearing of the aforesaid appeal was held on
Auditors' remuneration (note 30.1) 6,397 11,957
October 15, 2018 before the CIR(A) where written arguments were submitted by the Commissioner and the case has
Legal and professional 40,741 66,043
been reserved for order.
Others 77,752 9,528
1,417,590 1,230,232
32.2 During the year 2014, the income tax department amended the assessment filed by the Company for tax years 2010
and 2011.The Company filed appeals thereagainst before the Appellate Tribunal Inland Revenue (ATIR) against the said
disallowances, which through its decision provided relief in respect of certain items and confirmed certain disallowances
in favor of the tax department. The said disallowances included the charge in respect of exchange gain and loss incurred
for tax year 2010 and tax year 2011, and loss on derivative for tax year 2011 raising a demand in respect of these years
in aggregate of Rs. 1,075,466. The Company had challenged the said decision before the High Court of Sindh, which is with the Appellate Tribunal. However, during the year, the department has given Appeal Effect order to the aforementioned
pending to be heard, however, the Company is confident of a favourable outcome. favourable decision of the CIT(A) for tax year 2013. The management is confident for a favorable outcome on this case
and therefore no provision is being maintained in these financial statements in this respect.
32.3 The Company had filed a suit in the High Court of Sindh (HCS), contesting both the retrospective and prospective
application of the Alternative Corporate Tax (ACT) under section 113C. On January 27, 2018, the Supreme Court of 32.7 Relationship between tax expense and accounting profit
Pakistan passed an order requiring that a minimum of 50% of tax calculated by the taxation authorities be deposited
with taxation authorities to maintain / entertain a suit filed / to be filed with any Court of Pakistan. Pursuant to this, the The tax on the Company's profit before tax differs from the theoretical amount that would arise using the Company's
Company made payment of Rs 615,600 in respect of ACT for tax year 2014 to maintain its stay granted by the HCS. applicable tax rate as follows:
However, in respect of tax years 2015, 2016 and 2017, since no amendments to the returns filed by the Company
were received from the tax department, therefore, suits thereagainst were withdrawn by the Company. Later, on 2018 2017
September 13, 2018, the Company received recovery notice for payment in respect of tax years 2015, 2016 and 2017 --------------Rupees------------
against which a constitutional petition has been filed by the Company with the HCS. Stay for recovery of ACT has been
granted in respect of the constitutional petition. Any amount payable as ACT can be adjusted against tax liability of 10 Profit before taxation 21,399,827 14,995,090
future tax years immediately succeeding the tax year in which it was paid.
Tax calculated at the rate of 29% (2017: 30%) 6,205,949 4,498,526
32.4 This includes provision for Super Tax of Rs. 352,633 and Rs. 476,641 in respect of tax years 2015 and 2018, respectively, Depreciation not deductible for tax purposes 7,660 134,308
in accordance with section 4B 'Super Tax for rehabilitation of temporarily displaced persons' of the Income Tax
Ordinance, 2001 (the Ordinance), whereby, tax at the rate 3% (tax year 2018) and 2% (tax year 2015) is imposed on Tax effect of:
specified income of the Company. - Expenses not allowed for tax 243,502 332,883
- Final Tax Regime (674,852) (462,940)
The Company had filed a suit in the HCS, contesting Super Tax applicability as unconstitutional and ultravires the laws.
On June 27, 2018, the Supreme Court of Pakistan passed an order requiring that a minimum of 50% of tax calculated Effect of:
by the taxation authorities be deposited with the taxation authorities to maintain / entertain a suit filed / to be filed with - Tax credits (267,040) (70,236)
any Court of Pakistan. Pursuant to this, the legal suits filed against applicability of Super tax were withdrawn by the - Recoupable minimum turnover tax - 2,178,308
Company. - Prior year tax charge 829,274 (1,752,308)
- Incremental tax charge for Super Tax 435,202 -
Subsequent to the year end, on January 15, 2019, the Company received recovery notice from Federal Board of - Change in deferred tax liability rates due to reduction in tax rates (note 32.8) (2,048,552) -
Revenue (FBR) for payment of Super Tax in respect of tax year 2018. The Company has filed a constitutional petition Tax charge for the year 4,731,143 4,858,541
against the same in the High Court of Sindh and stay thereagainst has been generated. Adequate provision for super
tax for the respective tax year is being maintained in these financial statements.
32.5 As a result of demerger in the year 2009, all pending tax issues of the then Parent Company, Engro Chemical Pakistan
Ltd. had been transferred to the Company. Major issues pending before the taxation authorities are described below.
In previous years, the taxation department had filed reference applications in the HCS against the below-mentioned
ATIR’s decisions in Company’s favor. No hearing has been conducted to-date. The reference application includes the
following matters:
● Group Relief (Financial year 2006 to 2008): Rs. 1,500,847

● Inter-Corporate Dividend (Financial year 2007 to 2008): Rs. 336,500
● G.P. Apportionment (Financial years 1995 to 2002): Rs. 653,000
The Company is confident that all the aforementioned pending issues will eventually be decided in its favor. Therefore,
no provision in respect of this is being maintained in these financial statements.
32.6 As a result of merger of Engro Eximp (Private) Limited (EXIMP) with the Company, all pending tax issues of EXIMP have
been transferred to the Company. Major pending issue pertains to exercise of option to be taxed under the Normal
Tax Regime (NTR) by EXIMP for the years 2012 and 2013, resulting in an aggregate refund of Rs. 796,000. The tax
department had not accepted the said treatment for tax year 2013, however, the matter was decided in favor of the
Company by the Commissioner Income Tax Appeals(CIT(A)), against which the tax department has filed an appeal
32.8 Through Finance Act 2018, corporate tax rates for year ended December 31, 2018 and onwards were reduced by 1% 34. FINANCING STRUCTURE / MODE 2018 2017
for each subsequent tax year uptil tax year 2023 (financial year ending December 31, 2022). This represents amount -------------Rupees-----------
of deferred tax reversal relating to changes in tax rates. Conventional mode:
32.9 The Company carries tax provision in its financial statements of Rs. 3,675,656, Rs. 2,757,986 and Rs. 4,704,830, Assets
respectively, for the years ended 2015, 2016 and 2017, whilst the tax assessed for these years is Rs. 775,822, Rs. Short term investments 6,334,613 7,081,347
448,753 and Rs. 1,877,149, respectively. Management has assessed that the tax provisions in the financial statements Cash and bank balances 502,130 1,562,815
are sufficient. Working capital loan to subsidiary 13,677,700 2,000,000
20,514,443 10,644,162
33. EARNINGS PER SHARE (EPS)
Liabilities
33.1 Basic EPS has been calculated by dividing the profit attributable to equity holders of the Company by weighted average Long term borrowings 27,892,415 26,473,438
number of ordinary shares in issue during the year. Short term borrowings 568,217 1,671,732
28,460,632 28,145,170
33.2 As at December 31, 2018, there is no dilutive effect on the basic earnings per share of the Company. Earnings per Shariah compliant mode:
share is based on following:
2018 2017 Assets
--------------Rupees------------ Short term investments - 2,000
Cash and bank balances 139,930 92,591
139,930 94,591
Profit for the year 16,668,684 10,136,549 Liabilities
Add: Short term borrowings 68,661 -
- Interest on IFC loan - net of tax - 588 2,986,875 4,430,440
- Gain on revaluation of conversion options on IFC
loan - net of tax - (2,225)
35. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES
Profit used for the determination of basic / diluted EPS 16,668,684 10,134,912
35.1 The aggregate amounts for remuneration, including all benefits, to chief executive, directors and executives of the
Company are given below:
2018 2017
---Numbers (in thousands)--- Directors Executives Directors Executives
Chief Others Chief Others
Executive Executive
Weighted average number of ordinary shares at -----------------Rupees---------------- -----------------Rupees----------------
beginning of the year 1,335,299 1,330,932
Managerial remuneration
Add: Weighted average adjustments for shares issued including bonus 69,196 - 1,718,524 47,612 - 1,288,675
during the year under conversion of option - 3,482 Retirement benefits funds 8,658 - 183,867 6,649 - 145,773
Other benefits 14 - 54,209 87 - 49,365
Weighted average number of shares for Fees - 1,700 - - 1,450 -
determination of basic / diluted EPS 1,335,299 1,334,414 Total 77,868 1,700 1,956,600 54,348 1,450 1,483,813
Number of persons,
including those who
worked part of the year 2 5 343 1 5 258
35.2 These amounts are net off salaries, wages and others staff benefits paid on behalf of EAPL and subsequently charged 36.2 Valuation results
to EAPL.
The latest actuarial valuation of the defined benefit plans was carried out as at December 31, 2018, using the Projected
35.3 The Company also provides vehicles and certain household items for use of some executives and directors. Unit Credit Method. Details of the defined benefit plans are as follows:
35.4 Premium charged in respect of directors' indemnity insurance policy, purchased by the Company during the year, Defined Benefit
amounted to Rs. 295 (2017: Rs. 381). Defined Benefit Gratuity Plans - Funded Pension Plan-Funded
(Curtailed)
NMPT MPT
36. RETIREMENT AND OTHER SERVICE BENEFITS
2018 2017 2018 2017 2018 2017
36.1 Salient features --------------------------------------Rupees----------------------------------
36.2.1 Statement of financial position
The Company offers a defined post-employment gratuity benefit to permanent management and non-management reconciliation
employees. In addition, until June 30, 2005, the Company offered a defined post-employment pension benefit to
management employees in service which has been discontinued and the plan now only covers a handful of retired Present value of obligation 325,678 296,881 104,068 146,542 24,600 29,156
pensioners. Fair value of plan assets (176,611) (165,049) (136,832) (186,223) (38,104) (40,713)
Deficit / (surplus) of funded plans 149,067 131,832 (32,764) (39,681) (13,504) (11,557)
The gratuity and pension funds are governed under the Trusts Act, 1882, Trust Deed and Rules of Fund, Companies
Act, 2017, the Income Tax Ordinance, 2001 and the Income Tax Rules, 2002. Payable to Defined Contribution
Gratuity Fund - - 9,736 9,736 - -
Responsibility for governance of plan, including investment decisions and contribution schedule lie with Board of Payable in respect of inter-transfers - - 46 46 - -
Trustees of the Funds. Unrecognised asset - - - - 13,504 11,557
The Company faces the following risks on account of gratuity and pension funds: Net liability / (asset) at end of the year 149,067 131,832 (22,982) (29,899) - -
- Final salary risks - The risk that the final salary at the time of cessation of service is greater than what was
assumed. Since the benefit is calculated on the final salary, the benefit amount would also increase proportionately. 36.2.2 Movement in net liability / (asset)
recognised
- Asset volatility - Most assets are invested in risk free investments of 3,5 or 10 year SSC’s, RIC’s, DSC’s or
Government Bonds. However, investments in equity instruments is subject to adverse fluctuations as a result Net liability / (asset) at beginning of the year 131,832 69,534 (29,899) (17,667) - -
of change in the market price. Actual contribution paid by the employer - - - - - 79
Charge / (Income) for the year 27,770 18,202 2,361 3,632 - (930)
- Discount rate fluctuation - The plan liabilities are calculated using a discount rate set with reference to corporate
bond yields. A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset Remeasurements charged to OCI
by an increase in the value of the current plans’ bond holdings. (note 36.2.7) (8,198) 44,537 4,556 (15,864) - 851
- Investment risks - The risk of the investment underperforming and not being sufficient to meet the liabilities. Unrecognised asset (2,337) (441) - - - -
This risk is mitigated by closely monitoring the performance of investments.
Net liability / (asset) at end of the year 149,067 131,832 (22,982) (29,899) - -
- Risk of insufficiency of assets - This is managed by making regular contribution to the Fund as advised by the
actuary.
- In addition to above, the pension fund exposes the Company to Longevity Risk i.e. the pensioners survive
longer than expected.
Defined Benefit
Defined Benefit Gratuity Plans - Funded Pension Plan-Funded
Defined Benefit
(Curtailed)
NMPT MPT Defined Benefit Gratuity Plans - Funded Pension Plan-Funded
(Curtailed)
2018 2017 2018 2017 2018 2017 NMPT MPT
--------------------------------------Rupees---------------------------------- 2018 2017 2018 2017 2018 2017
36.2.3 Movement in defined
--------------------------------------Rupees----------------------------------
benefit obligation
As at beginning of the year 296,881 238,301 146,542 137,729 29,156 32,132 36.2.7 Remeasurement recognised in statement of
Current service cost 16,364 12,754 5,325 5,745 - - other comprehensive income
Interest cost 26,217 18,947 10,116 10,978 2,384 2,413
Benefits paid during the year (10,576) (19,835) (56,559) (6,444) (4,042) (3,920) (Gain) / loss from change in
Liability in respect of promotion out (2,337) (441) - - - - experience assumptions (2,115) 51,080 (1,356) (115) 2,636 (161)
Remeasurments charged to OCI Loss / (gain) from change in financial
(note 36.2.7) (871) 47,155 (1,356) (1,466) (2,898) (1,469) assumptions 1,244 (3,925) - (1,351) (5,534) (1,308)
As at end of the year 325,678 296,881 104,068 146,542 24,600 29,156 Remeasurement of obligation (871) 47,155 (1,356) (1,466) (2,898) (1,469)
36.2.4 Movement in fair value of Expected return on plan assets 14,811 13,499 13,080 13,091 3,354 3,343
plan assets Actual return on plan assets (23,111) (14,491) (8,242) (8,617) (2,254) (2,221)
Difference in fair value opening 973 (1,626) 1,074 (18,872) 821 1,722
At beginning of the year 165,049 168,767 186,223 165,178 40,713 44,213
Expected return on plan assets 14,811 13,499 13,080 13,091 3,354 3,343 Remeasurement of plan assets (7,327) (2,618) 5,912 (14,398) 1,921 2,844
Benefits paid during the year (10,576) (19,835) (56,559) (6,444) (4,042) (3,920)
Remeasurments charged to OCI Effect of asset ceiling - - - - 1,947 (524)
(note 36.2.7) 7,327 2,618 (5,912) 14,398 (1,921) (2,844) (8,198) 44,537 4,556 (15,864) 970 851
Actual contribution by the
employer - - - - - (79)
Defined Benefit
As at end of the year 176,611 165,049 136,832 186,223 38,104 40,713 Defined Benefit Gratuity Plans - Funded Pension Plan-Funded
(Curtailed)
NMPT MPT
36.2.5 Charge / (reversal) for the year
2018 2017 2018 2017 2018 2017
Current service cost 16,364 12,754 5,325 5,745 - - 36.2.8 Principal actuarial assumptions
Net interest cost 11,406 5,448 (2,963) (2,113) - (930) used in the actuarial valuation
27,770 18,202 2,362 3,632 - (930)
Discount rate 13.3% 8.8% 12.8% 7.8% 12.8% 8.8%
36.2.6 Actual return on plan assets 23,111 14,491 8,242 8,617 2,254 2,221 Expected per annum rate of return
on plan assets 13.3% 8.0% 12.8% 8.0% 12.8% 8.8%
Expected per annum rate of increase
in salaries - next year 12.3% 7.8% 12.8% 7.8% - -
Expected per annum rate of increase in
salaries-long term 12.3% 7.8% 12.8% 7.8% - -
36.2.9 Demographic assumptions
Mortality rate SLIC SLIC SLIC PMA-PFA

(2001-05) - I (2001-05) - I (2001-05) - I (80) - 2
Rate of employee turnover Light Heavy -
-
36.2.10 Sensitivity Analysis

36.2.14 Expected future cost / (reversal) for the year ending December 31, 2019 is as follows:
The impact of 1% change in following variables on defined benefit obligation is as follows: Rupees
Increase in assumption Decrease in assumption - Gratuity Fund - NMPT 37,071

Gratuity Funds Gratuity Funds
Pension Pension - Gratuity Fund - MPT (785)
NMPT MPT Fund NMPT MPT Fund
-------------------------------------Rupees------------------------------------ - Pension Fund (1,621)
36.2.15 Historical information of staff retirement benefits:

Discount rate 297,748 101,157 23,517 357,743 107,182 25,788 2018 2017 2016 2015 2014
Long terms salary increases 357,743 107,153 - 297,280 101,132 -
-------------------------------Rupees--------------------------------
Logn terms pension increases - - 25,933 - - 23,374
Gratuity Fund - NMPT
36.2.11 Maturity profile Present value of defined benefit obligation 325,678 296,881 238,301 228,376 166,212
Gratuity Funds
Fair value of plan assets (176,611) (165,049) (168,767) (169,638) (178,713)
Time in years NMPT MPT Pension Fund Deficit / (surplus) 149,067 131,832 69,534 58,738 (12,501)
-------------------------Rupees-----------------------
1 26,136 54,186 4,013 Gratuity Fund - MPT
2 24,026 4,281 4,013 Present value of defined benefit obligation 104,068 146,542 137,729 149,332 135,336
3 18,210 7,109 4,013 Fair value of plan assets (136,832) (186,223) (165,178) (166,957) (140,235)
4 19,841 10,437 4,013 Surplus (32,764) (39,681) (27,449) (17,625) (4,899)
5-10 242,569 92,582 4,013
11-15 510,995 20,289 4,013 Pension Fund
16-20 1,022,457 1,745 4,013 Present value of defined benefit obligation 24,600 29,156 32,132 33,367 34,406
20+ 2,406,656 - 4,013 Fair value of plan assets (38,104) (40,713) (44,213) (40,835) (38,824)
Surplus (13,504) (11,557) (12,081) (7,468) (4,418)
Weighted average duration (years) 8.58 2.80 5.82
36.3 Defined contribution plans
Defined Benefit Gratuity Plans - Funded Defined Benefit Pension
NMPT MPT* Plan - Funded (Curtailed) An amount of Rs. 226,016 has been charged during the year (2017: Rs. 197,220) in respect of defined contribution
plans maintained by the Holding Company.
2018 2018 2018
36.2.12 Plan assets comprise of
the following: Rupees (%) Rupees (%) Rupees (%) 37. CASH GENERATED FROM OPERATIONS 2018 2017
-------------Rupees----------
Fixed income instruments 139,280 79 121,988 89 29,264 77 Profit before taxation 21,399,827 14,995,090
Investment in equity instruments 33,434 19 42,491 31 6,850 18
Cash 3,897 2 4,122 3 1,990 5 Adjustment for non-cash charges and other items:
Other liabilities - - (31,769) (23) - - Depreciation (note 5.2) 5,166,276 5,066,037
Amortisation - net 24,548 22,032
176,611 100 136,832 100 38,104 100 Gain on disposal of property, plant and equipment (note 29) (21,316) (675,700)
Provision for retirement and other service benefits 66,577 64,561
Income on deposits / other financial assets (1,227,801) (102,997)
*The employees of the Company in respect of gratuity are members of Defined Benefit Gratuity Fund maintained and
Finance cost (note 31) 2,055,153 2,560,453
funded by the Holding Company. Accordingly, the above information is based upon the plan assets of Engro Corporation
Dividends received (1,474,088) (52,384)
Limited Gratuity Fund.
Provision for net realisable value of raw materials (note 10) 30,000 -
Provision for surplus and slow moving stores and spares (note 9) 233,914 4,435
36.2.13 The expected return on plan assets was determined by considering the expected returns available on the assets
Provision for impairment against trade debts (note 11) 18,230 -
underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption
Working capital changes (note 37.1) 8,602,174 12,046,865
yields as at the reporting date.
34,873,494 33,928,392
2018 2017
37.1 Working capital changes -------------Rupees-----------
(Increase) / Decrease in current assets

- Stores, spares and loose tools (279,407) (397,555)
- Stock-in-trade 538,743 3,291,722
- Trade debts 1,091,474 4,100,811
- Loans, advances, deposits and prepayments (778) (23,041)
- Other receivables 206,979 (1,520,258)
1,557,011 5,451,679
Increase in trade and other payables 7,045,163 6,595,186

8,602,174 12,046,865
38. CASH AND CASH EQUIVALENTS
Cash and bank balances (note 16) 642,060 1,655,406

Short term investments with original maturity
less than 3 months (note 15) 90,000 2,037,000
Short term borrowings (note 23) (636,878) (1,671,732)
95,182 2,020,674
39. FINANCIAL INSTRUMENTS BY CATEGORY
Financial assets as per statement of financial position
- Loans and receivables at amortised cost

Loans, advances and deposits 212,565 173,716
Trade debts 2,374,797 3,484,501
Other receivables 364,339 71,364
Working capital loan to subsidiary 13,677,700 2,000,000
Accrued income 439,345 46,911
17,710,806 7,431,898
- Available for sale

Short term investments 6,244,613 4,999,436
- Held to maturity
Short term investments 90,000 2,037,000
12,579,226 7,036,436
Financial liabilities as per statement of financial position
- Financial liabilities at amortised cost

Trade and other payables 22,723,096 14,421,143
Short term borrowings 636,878 1,671,732
Accrued interest / mark-up 405,620 543,569
54,576,223 47,540,322
c) Liquidity risk
Liquidity risk represents the risk that the Company will encounter difficulties in meeting obligations associated
with financial liabilities.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability
of funding through an adequate amount of committed credit facilities. Due to dynamic nature of the business,
the Company maintains flexibility in funding by maintaining committed credit lines available.
The Company's liquidity management involves projecting cash flows and considering the level of liquid assets
necessary to meet these, monitoring statement of financial position liquidity ratios against internal and external
regulatory requirements and maintaining debt financing plans.
2018 2017 The table below analyses the Company's financial liabilities into relevant maturity groupings based on the remaining
-----------Rupees------------ period at the reporting date to contractual maturity dates. The amounts disclosed in the table are the contractual
Loans, advances and deposits undiscounted cash flows.
212,565 173,716
Trade debts 2,374,797 3,484,501 2018 2017
Other receivables 364,339 71,364
Working capital loan to subsidiary 13,677,700 2,000,000 Maturity Maturity Maturity Maturity
Short term investments 6,334,613 7,083,347 upto after Total upto after Total
Cash and bank balances 640,860 1,654,206 one year one year one year one year
23,604,874 14,467,134
---------------------Rupees------------------- ---------------------Rupees-------------------
The credit quality of receivables can be assessed with reference to their historical performance with no or negligible
defaults in recent history. The credit quality of Company’s bank balances and short term investments can be Financial liabilities
assessed with reference to recent external credit ratings as follows:
Rating Trade and other payables 22,723,096 - 22,723,096 14,421,143 - 14,421,143
Accrued interest / mark-up 405,620 - 405,620 543,569 - 543,569
Rating Agency Short Term Long Term Borrowings 5,095,584 25,715,045 30,810,629 8,119,864 22,784,014 30,903,878
Short term borrowings 636,878 - 636,878 1,671,732 - 1,671,732
Allied Bank Limited PACRA A1+ AAA 28,861,178 25,715,045 54,576,223 24,756,308 22,784,014 47,540,322
Askari Bank Limited PACRA A1+ AA+
Bank Alfalah Limited PACRA A1+ AA+ 40.2 Capital risk management
Bank Al Habib Limited PACRA A1+ AA+
Bank Islami Pakistan Limited PACRA A1 A+ The Company's objective when managing capital are to safeguard the Company's ability to continue as a going concern
The Bank of Punjab PACRA A1+ AA in order to provide returns for shareholders and benefit for other stakeholders and to maintain an optimal capital structure
Albaraka Bank (Pakistan) Limited PACRA A1 A to reduce the cost of capital. The Company manages its capital structure and makes adjustments to it in the light of
Citi Bank N.A. MOODY'S P1 A1 changes in economic conditions. To maintain or adjust the capital structure, the Company may adjust the dividend
Dubai Islamic Bank (Pakistan) Limited JCR-VIS A1 AA- payment to shareholders or issue new shares.
Faysal Bank Limited PACRA A1+ AA
Habib Bank Limited JCR-VIS A1+ AAA The total long term borrowings to equity ratio as at December 31, 2018 based on total long term borrowings of Rs.
Habib Metropolitan Bank Limited PACRA A1+ AA+ 30,810,629 (2017: Rs. 30,903,878) and total equity of Rs. 42,995,748 (2017: Rs. 41,012,772) was 42%:58% (2017:
JS Bank Limited PACRA A1+ AA- 43%:57%).
MCB Bank Limited PACRA A1+ AAA
Meezan Bank Limited JCR-VIS A1+ AA+ The Company finances its operations through equity, borrowings and management of working capital with a view to
National Bank of Pakistan PACRA A1+ AAA maintaining an appropriate mix between various sources of finance to minimize risk.
Samba Bank Limited JCR-VIS A1 AA
Silk Bank Limited JCR-VIS A2 A-
Soneri Bank Limited PACRA A1+ AA-
Standard Chartered Bank (Pakistan) Limited PACRA A1+ AAA
United Bank Limited JCR-VIS A1+ AAA
40.3 Fair value estimation 41. TRANSACTIONS WITH RELATED PARTIES
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the 41.1 Following are the names of associated companies, undertakings and other related parties with whom the Company
principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) had entered into transactions or had agreements and arrangements in place during the year:
regardless of whether that price is directly observable or estimated using another valuation technique.
Name of Related Parties Direct Shareholding Relationship
As at December 31, 2018, all financial assets and financial liabilities are carried at amortised cost except for investment
in Pakistan Investment Bonds which are carried at their fair values.
Engro Corporation Limited 56.27% Holding Company
The carrying value of all financial assets and liabilities reflected in the consolidated financial statements approximate their EFert Agritrade (Private) Limited 100% Subsidiary Company
fair values. The Company classifies fair value measurements using a fair value hierarchy that reflects the significance of Engro Eximp FZE 100% Subsidiary Company
the inputs used in making the measurements. The fair value hierarchy has the following levels: Dawood Lawrencepur Limited N/A Associate of Holding Company
Engro Digital Limited N/A Subsidiary of Holding Company
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level1); Engro Elengy Terminal (Private) Limited N/A Subsidiary of Holding Company
Engro Eximp Agriproducts (Private) Limited N/A Subsidiary of Holding Company
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly Engro Foods Limited N/A Associate of Holding Company
(i.e. as prices) or indirectly (i.e. derived from prices) (level 2); and Engro Foundation N/A Associate of Holding Company
Engro Polymer & Chemicals Limited N/A Subsidiary of Holding Company
- Inputs for the asset or liability that are not based on observable market data (level 3). Engro Energy Limited N/A Subsidiary of Holding Company
Engro Powergen Qadirpur Limited N/A Subsidiary of Holding Company
The table below analyses financial instruments carried at fair value by valuation method. Engro Powergen Thar Limited N/A Subsidiary of Holding Company
Engro Vopak Terminal Limited N/A Associate of Holding Company
Sindh Engro Coal Mining Company Limited N/A Associate of Holding Company
Level 1 Level 2 Level 3 Total Aasim Butt N/A Key Management Personnel
Amir Iqbal N/A Key Management Personnel
----------------------------Rupees----------------------------- Asad Said Jafar N/A Director
Assets Atif Kaludi N/A Key Management Personnel
Asif Sultan Tajik N/A Key Management Personnel
Short term investments Asim Murtaza Khan N/A Director
Available for sale - 6,244,613 - 6,244,613 Fahd Khawaja N/A Key Management Personnel
Imran Ahmed N/A Key Management Personnel
Javed Akbar N/A Director
Level 2 - The fair valued financial instruments comprise of Pakistan Investment Bonds which are valued using discounted Mohammad Azhar Malik N/A Key Management Personnel
cash flow model. Mohsin Ali Mangi N/A Key Management Personnel
Mudassar Yaqub Rathore N/A Key Management Personnel
There were no transfers amongst the levels during the year. Muhammad Majid Latif N/A Key Management Personnel
Nadir Salar Qureshi N/A Chief Executive
Ruhail Mohammed N/A Former Chief Executive
40.4 Fair value of financial assets and liabilities Sadia Khan N/A Director
Syed Shahzad Nabi N/A Key Management Personnel
The carrying value of all financial assets and liabilities reflected in the financial statements approximate their fair values. Engro Corporation Limited DC Pension Fund N/A Post Employement Benefits
Engro Corporation Limited MPT Gratuity Fund N/A Post Employement Benefits
Engro Corporation Limited NMPT Gratuity Fund N/A Post Employement Benefits
Engro Corporation Limited DB Pension Fund N/A Post Employement Benefits
Engro Corporation Limited DC Gratuity Fund N/A Post Employement Benefits
Engro Corporation Limited Provident Fund N/A Post Employement Benefits
41.2 Details of transactions with related parties during the year, other than those which have been disclosed elsewhere in 42. PRODUCTION CAPACITY
these financial statements, are as follows:
2018 2017 Designed Annual Capacity Actual Production Remarks
------------Rupees------------- Metric Tons Metric Tons
Holding Company 2018 2017 2018 2017
Dividend paid 8,264,433 6,010,496
Purchases and services 408,698 249,670 Urea plant I & II 2,275,000 2,275,000 1,928,080 1,806,977 Production
Services provided to Holding Company 52,128 32,106 planned as per
Reimbursements made:
NPK plant 100,000 100,000 132,790 109,059 market demand
- by the Company 118,061 77,568
- to the Company 513,455 7,575
Use of assets - 499 43. NUMBER OF EMPLOYEES
Subsidiary companies Number of employees Average number of employees
Purchase of products - 9,125,835 as at December 31, as at December 31,
Disbursement of working capital loan to subsidiary 40,477,400 2,000,000
Repayment received against working capital loan disbursed to subsidiary 28,799,700 - 2018 2017 2018 2017
Reimbursements made: Factory Employees
- by the Company 29,604 92,637
- to the Company 131,782 177,755 Management employees 221 221 223 230
Commission received 607,698 198,348 Non-management employees 521 518 500 517
Dividend received 1,474,088 52,384
Funds collected against sales made on behalf of subsidiary 41,266,651 13,638,822 Other than Factory employees
Mark-up on short term sub-ordinated loan from subsidiary 771,326 22,078
Associated companies Non-management employees
Purchases and services 99,219 134,989 9 9 9 9
Sale of products 340 2,645 1,247 1,201 1,226 1,185
Services provided 106,259 112,782 44. PROVIDENT FUND
Reimbursements made:
- by the Company 15,838 17,241 The employees of the Company participate in the Provident Fund maintained by the Holding Company. The investments
- to the Company 61,159 77,517 out of the provident funds have been made in accordance with the provisions of Section 218 of the Companies Act,
Payment of mark-up on TFCs and repayment of principal amount 1,025 9,016
2017 and the conditions specified there under.
Donation 96,000 63,000
Use of assets - 2,706
45. SEASONALITY
Contribution to staff retirement benefits
Pension fund 17,759 18,881 The Company's fertilizer business is subject to seasonal fluctuations as a result of two different farming seasons viz,
Gratuity fund 118,611 97,020 Rabi (from October to March) and Kharif (from April to September). On an average fertilizer sales are more tilted towards
Provident fund 132,870 112,471 Rabi season. The Company manages seasonality in the business through appropriate inventory management.
Dividend paid to staff retirement benefits

Pension fund 1,438 - 46. NON-ADJUSTING EVENT AFTER THE REPORTING DATE
Gratuity fund 3,607 -
Provident fund 7,068 -
The Board of Directors in its meeting held on February 8, 2019 has proposed a final cash dividend of Rs. 3 per share
Others for the year ended December 31, 2018 amounting to Rs. 4,005,898 for approval of the members at the Annual General
Remuneration of key management personnel 249,190 214,028 Meeting to be held on March 28, 2019. The amount of total dividend is calculated at the number of shares outstanding
as at December 31, 2018.
other
47. CORRESPONDING FIGURES

information
47.1 Corresponding figures and balances have been rearranged and reclassified, wherever necessary, for the purpose of
comparison, the effects of which are not material.
47.2 Under the Companies Act, 2017 the definition of 'executives' has been revised. As a result, comparative figures have
been restated to reflect the said change.
48. DATE OF AUTHORISATION FOR ISSUE
These financial statements were authorised for issue on February 8, 2019 by the Board of Directors of the Company.


shareholder information
Annual General Meeting Quarterly Results
The Annual General Meeting will be held at 10:00 a.m. on March 28, 2019 at Karachi Marriott Hotel, Abdullah The Company issues quarterly Financial Statements. The planned dates for release of the quarterly results in
Haroon Road, Karachi. The shareholders as of March 21, 2019 are encouraged to participate and vote. 2019 are:
Any shareholder may appoint a proxy to vote on his or her behalf. Proxies should be filed with the Company • 1st quarter: April 19, 2019
at least 48 hours before the meeting time. • 2nd quarter: August 08, 2019
• 3rd quarter: October 18, 2019
CDC Shareholders or their Proxies are requested to bring with them copies of their Computerized National
Identity Card or passport alongwith the Participant’s ID number and their account number at the time of The Company holds quarterly briefings with Security Analysts to discuss the results and the business
attending the Annual General Meeting in order to facilitate their identification. environment. These sessions are planned to be held on:
Ownership • 1st quarter : April 22, 2019

• 2nd quarter: August 9, 2019
On December 31, 2018, there were 24,795, shareholders on record of the Company’s ordinary shares. • 3rd quarter: October 21, 2019
Circulation of Annual Reports through CD/DVD/USB All annual/quarterly reports and presentations from quarterly briefings are regularly posted at the Company’s
website: www.engro.com and www.engrofertilizers.com
As notified by the Securities and Exchange Commission of Pakistan (SECP) vide S.R.O. 470(I)/2016 dated
May 21, 2016 and in continuation with the SRO.787(1)/2014 dated 8th September, 2014, and approved by The Company reserves the right to change any of the above dates.
the shareholders in the Annual General Meeting of the Company held on March 30, 2017, the Company shall
circulate its annual balance sheet, and profit and loss account, auditor’s report and directors report etc. Change of Address
(“Annual Audited Accounts”) to its members through CD/DVD/USB at their registered addresses, save for
those who opt for a hardcopy of the Annual Audited Accounts. The standard request forms for electronic All registered shareholders should send information on changes of address to:
transmission is available at the Company’s website www.engrofertilizers.com. M/s. FAMCO Associates (Private) Limited
8-F, Next to Hotel Faran Nursery,
Alternatively members can fill up the Standard Request Forms respectively at the end of the report. Block-6 P.E.C.H.S. Shahra-e-Faisal
Karachi-74000
E-Dividend Mandate (Mandatory)
In accordance with the provisions of Section 242 of the Companies Act, 2017, a listed company, is required
to pay cash dividend ONLY through electronic mode directly into the bank account designated by the
entitled shareholders. Accordingly, the shareholders are requested to provide the information mentioned on
an E-Dividend Mandate Form available at the Company’s website www.engrofertilizers.com and send the
same to your brokers/the Central Depository Company Ltd. if the shares are held in the electronic form or to
the Company’s Shares Registrar if the shares are held in paper certificate form. For ease of shareholders,
E-Dividend Mandate Form is also provided at the end of the report.
Analyst’s Briefing Held During the Year
Engro Fertilizers continued to apprise its stakeholders of the relevant updates about the Company as well as
the Fertilizer industry by conducting four Analyst Briefings during the year, one at the end of every quarter.
The briefings were attended by analysts as well as our stakeholders. The attendees were briefed on the
performance of the Company during the period, both from a financial and an operational perspective. At the
end of every session, a Q&A session was conducted to ensure that a comprehensive revelation of the
Company’s progress was conveyed. The presentation was also uploaded on the website after every analyst
briefing for the benefit of all stakeholders.
pattern of shareholding
As at December 31, 2018 As at December 31, 2018
No. of Shareholdings No. of Shareholdings

No of shareholders From To Total Shares Held No of shareholders From To Total Shares Held
3,897 1 100 121,884 7 245,001 250,000 1,745,500
9,816 101 500 4,390,320 5 250,001 255,000 1,264,000
3,732 501 1,000 3,460,711 5 255,001 260,000 1,290,056
3,822 1,001 5,000 9,922,240 3 260,001 265,000 792,000
1,112 5,001 10,000 8,840,706 5 265,001 270,000 1,342,000
505 10,001 15,000 6,530,080 4 270,001 275,000 1,093,620
307 15,001 20,000 5,577,916 3 275,001 280,000 838,000
224 20,001 25,000 5,271,647 2 280,001 285,000 564,500
146 25,001 30,000 4,152,316 1 285,001 290,000 288,000
92 30,001 35,000 3,018,472 3 290,001 295,000 884,500
97 35,001 40,000 3,731,157 9 295,001 300,000 2,695,974
55 40,001 45,000 2,369,716 4 300,001 305,000 1,212,250
109 45,001 50,000 5,369,765 2 305,001 310,000 615,300
48 50,001 55,000 2,547,386 4 315,001 320,000 1,278,315
44 55,001 60,000 2,582,112 2 320,001 325,000 643,500
36 60,001 65,000 2,259,157 2 325,001 330,000 656,500
33 65,001 70,000 2,258,231 2 330,001 335,000 669,000
45 70,001 75,000 3,310,656 3 335,001 340,000 1,019,820
22 75,001 80,000 1,724,500 4 340,001 345,000 1,375,500
13 80,001 85,000 1,081,352 3 345,001 350,000 1,046,192
16 85,001 90,000 1,406,691 2 355,000 360,000 713,000
10 90,001 95,000 932,480 1 365,001 370,000 366,500
54 95,001 100,000 5,375,701 2 370,001 375,000 742,128
16 100,001 105,000 1,633,167 1 375,001 380,000 379,000
14 105,001 110,000 1,518,804 3 380,001 385,000 1,149,500
4 110,001 115,000 448,000 1 385,001 390,000 385,800
16 115,001 120,000 1,901,432 2 390,001 395,000 782,500
12 120,001 125,000 1,482,200 5 400,000 405,000 2,005,382
16 125,001 130,000 2,042,476 2 410,001 415,000 829,500
8 130,001 135,000 1,064,706 3 415,001 420,000 1,247,000
9 135,001 140,000 1,239,331 2 425,000 430,000 852,000
6 140,001 145,000 850,311 4 430,001 435,000 1,728,506
20 145,001 150,000 2,991,200 1 440,001 445,000 442,000
8 150,001 155,000 1,220,130 2 450,001 455,000 904,000
6 155,001 160,000 951,402 1 460,001 465,000 463,500
6 160,001 165,000 970,156 1 465,001 470,000 467,240
9 165,001 170,000 1,513,399 2 475,000 480,000 952,500
6 170,001 175,000 1,042,650 2 480,001 485,000 964,500
6 175,001 180,000 1,071,048 4 485,001 490,000 1,951,500
3 180,001 185,000 553,000 9 495,001 500,000 4,497,500
4 185,001 190,000 751,190 1 500,001 505,000 501,542
6 190,001 195,000 1,166,000 2 510,001 515,000 1,027,500
15 195,001 200,000 2,986,978 3 515,001 520,000 1,552,800
8 200,001 205,000 1,622,929 3 530,001 535,000 1,600,500
5 205,001 210,000 1,039,774 2 550,000 555,000 1,100,000
4 210,001 215,000 851,161 1 555,001 560,000 558,500
3 215,001 220,000 655,115 2 560,001 565,000 1,122,000
9 220,001 225,000 2,014,971 1 565,001 570,000 565,040
6 225,001 230,000 1,369,524 2 580,001 585,000 1,164,000
2 230,001 235,000 467,500 3 600,000 605,000 1,800,500
8 235,001 240,000 1,912,505 3 605,001 610,000 1,824,500
3 240,001 245,000 729,312 2 610,001 615,000 1,224,528
As at December 31, 2018 As at December 31, 2018
No. of Shareholdings No. of Shareholdings

No of shareholders From To Total Shares Held No of shareholders From To Total Shares Held
1 615,001 620,000 615,500 1 1,300,000 1,305,000 1,300,000
1 620,001 625,000 621,000 3 1,335,001 1,340,000 4,006,500
1 625,001 630,000 626,000 1 1,355,001 1,360,000 1,355,720
2 645,001 650,000 1,299,500 1 1,385,000 1,390,000 1,385,000
2 655,001 660,000 1,313,500 2 1,395,001 1,400,000 2,795,500
1 670,001 675,000 671,789 2 1,405,001 1,410,000 2,815,500
2 680,001 685,000 1,369,000 1 1,425,001 1,430,000 1,429,000
2 685,001 690,000 1,373,500 1 1,455,001 1,460,000 1,455,282
2 690,001 695,000 1,389,000 1 1,515,001 1,520,000 1,519,516
1 700,000 705,000 700,000 1 1,535,001 1,540,000 1,536,500
1 705,001 710,000 707,000 1 1,545,001 1,550,000 1,546,500
1 735,001 740,000 738,500 2 1,550,001 1,555,000 3,109,000
2 750,000 755,000 1,500,000 1 1,625,001 1,630,000 1,625,500
1 765,001 770,000 767,000 1 1,635,001 1,640,000 1,635,500
1 790,000 795,000 790,000 1 1,640,001 1,645,000 1,644,000
1 820,001 825,000 821,500 1 1,685,001 1,690,000 1,689,600
1 825,001 830,000 828,221 1 1,700,000 1,705,000 1,700,000
1 830,001 835,000 832,785 1 1,715,001 1,720,000 1,717,500
2 845,001 850,000 1,694,000 1 1,735,001 1,740,000 1,737,500
3 850,001 855,000 2,560,500 1 1,740,001 1,745,000 1,744,718
1 860,001 865,000 862,500 1 1,750,001 1,755,000 1,751,761
1 865,001 870,000 865,364 1 1,775,000 1,780,000 1,775,000
2 880,001 885,000 1,768,000 1 1,800,001 1,805,000 1,801,000
1 910,001 915,000 913,827 1 1,805,001 1,810,000 1,805,430
1 920,001 925,000 924,507 1 1,830,001 1,835,000 1,830,500
1 930,001 935,000 933,000 2 1,935,000 1,940,000 3,875,000
2 955,000 960,000 1,914,521 1 1,955,001 1,960,000 1,958,000
1 970,001 975,000 973,000 2 1,995,001 2,000,000 3,998,000
1 975,001 980,000 977,000 1 2,010,001 2,015,000 2,012,000
2 985,000 990,000 1,971,500 1 2,150,000 2,155,000 2,150,000
2 990,001 995,000 1,987,114 1 2,205,001 2,210,000 2,207,000
6 995,001 1,000,000 5,998,500 1 2,220,001 2,225,000 2,222,482
1 1,000,001 1,005,000 1,004,000 2 2,225,001 2,230,000 4,454,500
1 1,010,001 1,015,000 1,011,500 1 2,235,001 2,240,000 2,236,301
3 1,025,001 1,030,000 3,082,500 1 2,300,001 2,305,000 2,304,200
2 1,035,000 1,040,000 2,071,945 1 2,380,000 2,385,000 2,380,000
1 1,050,001 1,055,000 1,051,500 1 2,445,001 2,450,000 2,446,500
1 1,065,001 1,070,000 1,069,500 1 2,500,000 2,505,000 2,500,000
1 1,070,001 1,075,000 1,072,500 1 2,605,001 2,610,000 2,608,500
1 1,090,001 1,095,000 1,091,000 1 2,630,001 2,635,000 2,633,500
1 1,120,001 1,125,000 1,123,082 1 2,635,001 2,640,000 2,635,500
1 1,125,001 1,130,000 1,127,300 1 2,685,001 2,690,000 2,687,500
2 1,145,001 1,150,000 2,294,000 1 2,705,001 2,710,000 2,708,500
1 1,155,001 1,160,000 1,157,105 1 2,755,001 2,760,000 2,759,000
1 1,160,001 1,165,000 1,161,500 1 2,850,001 2,855,000 2,851,000
2 1,165,001 1,170,000 2,334,645 3 2,870,000 2,875,000 8,618,000
1 1,185,001 1,190,000 1,188,275 1 2,965,001 2,970,000 2,967,000
1 1,200,001 1,205,000 1,201,000 1 3,015,000 3,020,000 3,015,000
1 1,210,001 1,215,000 1,211,500 1 3,095,001 3,100,000 3,096,500
1 1,220,001 1,225,000 1,223,136 1 3,150,001 3,155,000 3,152,783
1 1,230,001 1,235,000 1,230,800 1 3,180,001 3,185,000 3,180,263
2 1,265,001 1,270,000 2,536,995 1 3,195,001 3,200,000 3,196,000
categories of shareholding
As at December 31, 2018
No. of Shareholdings
No of shareholders From To Total Shares Held
1 3,205,001 3,210,000 3,207,000 As at December 31, 2018
1 3,260,001 3,265,000 3,263,000 S. No. Shareholders’ Category No. of Shareholders No. of Shares Percentage
1 3,310,001 3,315,000 3,310,893
1 3,600,000 3,605,000 3,600,000 1 Directors, Chief Executive Officer, and their
1 3,680,000 3,685,000 3,680,000 spouse and minor children 7 34,380 0.003
2 3,750,000 3,755,000 7,500,000
1 3,755,001 3,760,000 3,758,620 2 Associated Companies, Undertakings and
1 3,915,001 3,920,000 3,919,500 Related Parties 1 751,312,050 56.27
1 4,000,000 4,005,000 4,000,000
1 4,035,001 4,040,000 4,035,500 3 NIT and ICP - - -
1 4,285,001 4,290,000 4,289,000
1 4,425,000 4,430,000 4,425,000 4 Banks, Development Financial Institutions,
1 4,500,001 4,505,000 4,502,761 Non Banking Financial Institutions 32 59,681,638 4.47
1 4,515,001 4,520,000 4,516,000
1 4,595,001 4,600,000 4,596,500 5 Insurance Companies 24 17,200,555 1.29
1 4,760,001 4,765,000 4,762,000 117,204,691
6 Modarabas and Mutual Funds 105 8.78
1 5,045,001 5,050,000 5,046,000
1 5,155,001 5,160,000 5,156,000 7 Shareholders holding 10% 1 751,312,050 56.27
1 5,260,001 5,265,000 5,262,000
1 5,300,001 5,305,000 5,303,000 8 General Public:
1 5,370,001 5,375,000 5,373,000 a. local 24,052 175,181,372 13.12
1 5,450,001 5,455,000 5,453,900 b. Foreign - - -
1 5,545,001 5,550,000 5,549,856
1 5,835,001 5,840,000 5,838,991
9 Others 574 214,684,689 16.08
1 6,010,001 6,015,000 6,011,000
1 6,080,001 6,085,000 6,080,347
1 6,665,001 6,670,000 6,669,000
1 6,700,001 6,705,000 6,700,500
1 7,930,001 7,935,000 7,930,350
1 8,000,000 8,005,000 8,000,000
1 8,150,000 8,155,000 8,150,000
1 8,335,001 8,340,000 8,335,380
1 8,935,001 8,940,000 8,936,000
1 27,235,001 27,240,000 27,235,200
1 751,310,001 751,315,000 751,312,050
24,795 1,335,299,375
key shareholding and
shares traded CDC - TRUSTEE FAYSAL ISLAMIC ASSET ALLOCATION FUND 60,000
CDC - TRUSTEE FAYSAL STOCK FUND 5,000
Information of shareholding required under reporting framework is as follows: CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 25,000
CDC - TRUSTEE FIRST DAWOOD MUTUAL FUND 3,500
1. Associated Companies, undertakings & related parties CDC - TRUSTEE FIRST HABIB ASSET ALLOCATION FUND 14,000
CDC - TRUSTEE FIRST HABIB STOCK FUND 88,000
Engro Corporation Limited 751,312,050 CDC - TRUSTEE HBL - STOCK FUND 1,146,000
CDC - TRUSTEE HBL EQUITY FUND 79,000
2. Directors, CEO & their spouses & minor children CDC - TRUSTEE HBL IPF EQUITY SUB FUND 101,200
CDC - TRUSTEE HBL ISLAMIC ASSET ALLOCATION FUND 282,500
Mr. Ghias Khan 1 CDC - TRUSTEE HBL ISLAMIC EQUITY FUND 237,000
Mr. Nadir Salar Qureshi 1 CDC - TRUSTEE HBL MULTI - ASSET FUND 66,500
Mr. Javed Akbar 26,524 CDC - TRUSTEE HBL PF EQUITY SUB FUND 78,500
Mr. Abdul Samad Dawood 6,632 CDC - TRUSTEE JS ISLAMIC DEDICATED EQUITY FUND (JSIDEF) 1,188,275
Mr. Asim Murtaza Khan 1220 CDC - TRUSTEE JS ISLAMIC FUND 607,000
Mr. Asad Said Jafar 1 CDC - TRUSTEE JS ISLAMIC PENSION SAVINGS FUND-EQUITY ACCOUNT 135,000
Ms. Sadia Khan 1 CDC - TRUSTEE JS LARGE CAP. FUND 534,000
CDC - TRUSTEE JS PENSION SAVINGS FUND - EQUITY ACCOUNT 134,500
3. Executives 1,861,997 CDC - TRUSTEE KSE MEEZAN INDEX FUND 1,223,136
CDC - TRUSTEE LAKSON EQUITY FUND 1,689,600
4. Public Sector Companies & Corporations 7,106,986 CDC - TRUSTEE LAKSON ISLAMIC TACTICAL FUND 83,700
CDC - TRUSTEE LAKSON TACTICAL FUND 319,026
5. Banks, Development Finance Institutions, 91,788,172 CDC - TRUSTEE MCB DCF INCOME FUND 18,500
Non-Banking Finance Institutions, Insurance CDC - TRUSTEE MCB PAKISTAN ASSET ALLOCATION FUND 403,000
Companies, Takaful, Modaraba and Pension Funds CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 4,596,500
CDC - TRUSTEE MEEZAN ASSET ALLOCATION FUND 1,940,000
6. Mutual Funds CDC - TRUSTEE MEEZAN BALANCED FUND 3,015,000
CDC - TRUSTEE MEEZAN ISLAMIC FUND 27,235,200
ASIAN STOCKS FUNDS LTD. 1 CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND - EQUITY SUB FUND 3,263,000
CDC - TRUSTEE ABL INCOME FUND 86,000 CDC - TRUSTEE NAFA INCOME FUND - MT 15,000
CDC - TRUSTEE ABL INCOME FUND – MT 272,500 CDC - TRUSTEE NAFA INCOME OPPORTUNITY FUND - MT 41,000
CDC - TRUSTEE ABL ISLAMIC PENSION FUND - EQUITY SUB FUND 40,000 CDC - TRUSTEE NAFA ISLAMIC ACTIVE ALLOCATION EQUITY FUND 1,408,500
CDC - TRUSTEE ABL PENSION FUND - EQUITY SUB FUND 22,000 CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND 4,762,000
CDC - TRUSTEE ABL STOCK FUND 1,737,500 CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND - II 27,000
CDC - TRUSTEE AKD INDEX TRACKER FUND 140,275 CDC - TRUSTEE NAFA ISLAMIC STOCK FUND 4,516,000
CDC - TRUSTEE AL AMEEN ISLAMIC DEDICATED EQUITY FUND 4,502,761 CDC - TRUSTEE NAFA MULTI ASSET FUND 327,500
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 5,046,000 CDC - TRUSTEE NAFA STOCK FUND 5,303,000
CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND 1,429,000 CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 913,827
CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 3,758,620 CDC - TRUSTEE NBP AITEMAAD REGULAR PAYMENT FUND 119,500
CDC - TRUSTEE ALFALAH CAPITAL PRESERVATION FUND II 162,000 CDC - TRUSTEE NIT INCOME FUND - MT 126,500
CDC - TRUSTEE ALFALAH GHP ALPHA FUND 1,051,500 CDC - TRUSTEE NIT ISLAMIC EQUITY FUND 1,407,000
CDC - TRUSTEE ALFALAH GHP INCOME MULTIPLIER FUND - MT 35,000 CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 992,114
CDC - TRUSTEE ALFALAH GHP ISLAMIC DEDICATED EQUITY FUND 924,507 CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 279,000
CDC - TRUSTEE ALFALAH GHP ISLAMIC STOCK FUND 3,310,893 CDC - TRUSTEE PAKISTAN INCOME FUND - MT 2,500
CDC - TRUSTEE ALFALAH GHP ISLAMIC VALUE FUND 98,500 CDC - TRUSTEE PICIC GROWTH FUND 1,644,000
CDC - TRUSTEE ALFALAH GHP STOCK FUND 1,635,500 CDC - TRUSTEE PICIC INVESTMENT FUND 862,500
CDC - TRUSTEE ALFALAH GHP VALUE FUND 687,500 CDC - TRUSTEE UBL ASSET ALLOCATION FUND 431,000
CDC - TRUSTEE ALHAMRA ISLAMIC STOCK FUND 1,625,500 CDC - TRUSTEE UBL CAPITAL PROTECTED FUND-III 5,000
CDC - TRUSTEE APF-EQUITY SUB FUND 269,000 CDC - TRUSTEE UBL DEDICATED EQUITY FUND 55,318
CDC - TRUSTEE APIF - EQUITY SUB FUND 335,000 CDC - TRUSTEE UBL RETIREMENT SAVINGS FUND - EQUITY SUB FUND 385,800
CDC - TRUSTEE ASKARI ASSET ALLOCATION FUND 30,000 CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 2,236,301
CDC - TRUSTEE ASKARI EQUITY FUND 38,500 CDC - TRUSTEE UNIT TRUST OF PAKISTAN 477,500
CDC - TRUSTEE ATLAS INCOME FUND - MT 253,000 CDC TRUSTEE - MEEZAN DEDICATED EQUITY FUND 933,000
CDC - TRUSTEE ATLAS ISLAMIC STOCK FUND 1,400,000 CDC-TRUSTEE AL-AMEEN ISLAMIC RET. SAV. FUND-EQUITY SUB FUND 738,500
CDC - TRUSTEE ATLAS STOCK MARKET FUND 3,919,500
CDC - TRUSTEE DAWOOD ISLAMIC FUND 3,500
CDC-TRUSTEE ALHAMRA ISLAMIC ASSET ALLOCATION FUND 2,207,000 7. Shareholders Holding five percent or more Voting Rights in the Listed Company:
CDC-TRUSTEE FIRST HABIB ISLAMIC STOCK FUND 96,500
CDC-TRUSTEE HBL ISLAMIC STOCK FUND 955,000 Engro Corporation Limited 751,312,050
CDC-TRUSTEE NAFA ASSET ALLOCATION FUND 514,000
CDC-TRUSTEE NAFA SAVINGS PLUS FUND - MT 47,000 8. Details of purchase/sale of shares by Directors, Executives*
CDC-TRUSTEE NITIPF EQUITY SUB-FUND 71,000 and their spouses / minor children during 2018
CDC-TRUSTEE NITPF EQUITY SUB-FUND 15,000
M C F S L-TRUSTEE ASKARI ISLAMIC ASSET ALLOCATION FUND 70,500
MC FSL - TRUSTEE JS GROWTH FUND 427,000 S. No. Name of holder Date Sale / Purchase No of Shares Rate Per Share
MC FSL TRUSTEE JS - INCOME FUND 84,500
1 Farooq Ahmed Qureshi 17.1.2018 Bought 6,500 68
MC FSL TRUSTEE JS - INCOME FUND - MT 15,500
MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 1,554,500 2 Nadeem Ismat 22.1.2018 Sold 582 69
MCBFSL - TRUSTEE HBL ISLAMIC DEDICATED EQUITY FUND 211,500 3 Ghulam Qadir 24.1.2018 Bought 1,500 69.62
MCBFSL - TRUSTEE PAK OMAN ADVANTAGE ASSET ALLOCATION FUND 21,000 4 Farooq Ahmed Qureshi 06.2.2018 Bought 2,500 68.63
MCBFSL - TRUSTEE PAK OMAN ISLAMIC ASSET ALLOCATION FUND 183,000 5 Fahd Khawaja 16.2,2018 Bought 5,000 68.88
MCBFSL TRUSTEE ABL ISLAMIC DEDICATED STOCK FUND 986,500 6 Farooq Ahmed Qureshi 14.3.2018 Bought 3,500 70.40
MCBFSL-TRUSTEE ABL ISLAMIC ASSET ALLOCATION FUND 15,000
7 Fahd Khawaja 26.4.2018 Bought 2,500 73.14
TRI-STAR MUTUAL FUND LIMITED 91
8 Zafar Altaf 18/05/2018 Sold 1,000 72.5
TOTAL 116,869,645 9 Shahid Mahmood 05/06/2018 Sold 7 75
10 Shahid Mahmood 05/06/2018 Sold 5 74.1
11 Muddassar Yaqub 06/06/2018 Sold 4,000 74
12 Muddassar Yaqub 12/06/2018 Sold 1,000 74.5
13 Fahd Khawaja 16/07/2018 Bought 2,500 75.8
14 Imtiaz ali 10/08/2018 Bought 500 81
15 Muhammad Asif Sultan Tajik 17/09/2018 Bought 27,500 76.99
16 Muhammad Asif Sultan Tajik 18/09/2018 Bought 87,500 78.26
17 Muhammad Shafiq Ahmad Ajmal 25/09/2018 Sold 3000 76.25
18 Mohammad Asif Sultan Tajik 01/10/2018 Bought 65,000 75.48
19 Farooq Ahmed Qureshi 27.9.2018 Sold 12,500 75.5
20 Farooq Ahmed Qureshi 2.10.2018 sold 67,000 74.5
21 Raza Mohammad Burero 29/10/2018 Bought 18,500 82.42
22 Mohammad Asif Sultan Tajik 30.10.2018 Bought 17,000 80.80
24 Mohammad Asif Sultan Tajik 08/11/2018 Bought 234,500 83
26 Fahd Khawaja 12/11/2018 Bought 5,000 81.7
27 Raza Mohammad Burero 12/11/2018 Bought 7,500 81.5
28 Fahd Khawaja 12/11/2018 Bought 5,000 81
29 Bilal Qasim 03/12/2018 Bought 1,300 73.85
30 Muhammad Mujtaba Khan 03/12/2018 Sold 1000 73.8
31 Ali Akbar 03/12/2018 Bought 2000 75
33 Imtiaz Ali 19/12/2018 Bought 4,000 71.51
34 Ali Akbar 28/12/2018 Bought 500 70.98
35 Ali Akar 31/12/2018 Bought 5,500 69.43
36 Bilal Qasim 28/12/2018 Bought 1,000 70.01
37 Mumtaz Ali Soomro 31/12/2018 Bought 7,000 69.5
38 Mumtaz Ali Soomro 31.12.2018 Bought 4,000 69.80
* For the purpose of declaration of share trades, all employees of the Company are considered as “Executive”
Proxy Form
I/We
of being a member of ENGRO FERTILIZERS LIMITED
and holder of
(Number. of shares)
Ordinary shares as per share Register Folio No. and/or CDC

Participant I.D. No. and Sub Account No. , hereby appoint
of or failing him
of
as my/our proxy to vote for me/us and on my/our behalf at the 10th Annual general meeting of the Company to be held on
the 28th day of March, 2019 and at any adjournment thereof.
Signed this day of 2019.
WITNESSES:
1) Signature :
Name :
Address :
CNIC Or :
Passport No.
Signature
(Signature should agree with the specimen
registered with the Company)
2) Signature :
Name :
Address :
CNIC Or :
Passport No.
Note:
Proxies in order to be effective, must be received by the Company not less than 48 hours before the meeting. A Proxy need
not be a member of the Company.
CDC Shareholders and their proxies are each requested to attach an attested photocopy of their Computerized National
Identity Card or Passport with this proxy form before submission to the Company.
standard request form
circulation of annual audited accounts
The Share Registrar Date:
Engro Fertilizers Ltd.
FAMCO Associates (Pvt.) Ltd.
8-F, Near Hotel Faran
Nursery, Block-6,
P.E.C.H.S. Karachi
Subject: Request for Hard Copy of Annual Audited Accounts

of Engro Fertilizers Limited
Dear Sirs,
As notified by the Securities and Exchange Commission of Pakistan (SECP) vide S.R.O. 470(I)/2016 dated May 21, 2016 and
approved by the Shareholders in the Annual General Meeting of the Company held on March 30, 2017, the Company is
circulating its annual balance sheet, and profit and loss account, auditor’s report and directors report, etc. (“Annual Audited
Accounts”) to its members through CD/DVD/USB at their registered addresses, save for those who opt for a hardcopy of the
Annual Audited Accounts by filling out the details below and sending it to the Company’s Share Registrar and Company
Secretary.
I/We, ________________________________ S/o, D/o, W/o ________________________ being a registered shareholder of Engro
Fertilizers Limited with the particulars as mentioned below would request that my/our name be added to the list of
Shareholders of the Company who opt for delivery of a hardcopy of the Annual Audited Accounts of the Company and hereby
request you send to me/us the Annual Audited Accounts in hard copy form at my/our registered address as contained in the
member register instead of providing the same through CD/DVD/USB.
Particulars
Name of Shareholder
Folio No. / CDC ID No.
CNIC / NICOP / Passport No.
Land Line Telephone No. (if any)
Cell No. (if any)
Yours truly,
Shareholder’s Signature
Copy to:
Company Secretary
Engro Fertilizers Limited
7th & 8th Floor, HC # 3, The Harbor Front
Building, Block 4, Karachi – 75600
electronic credit mandate (mandatory)
Dear Shareholder,
ELECTRONIC CREDIT MANDATE (Mandatory)
We wish to inform you that in accordance with the provisions of Section 242 of the Companies Act, 2017, it is mandatory for a listed company
to pay cash dividend to the shareholders only through electronic mode directly into the bank account designated by the entitled shareholders.
Please note that in case of non-communication of Bank account details by the shareholders to their respective Registrars, Participant/CDC
IAS within the afore-mentioned time frame, the Company would be constrained to act in accordance with the provisions of the law for
withholding the amount of dividend which may be payable by the Company on or after November 01, 2017.
In order to receive your dividends directly in your Bank account, please complete the particulars as mentioned below and return this letter
duly signed along with a copy of your CNIC to the Registrar of the Company M/s FAMCO Associates (Pvt.) Limited, 8-F, Near Hotel Faran,
Nursery, Block 6, P.E.C.H.S., Shahrah-e-Faisal, Karachi.
CDC shareholders are requested to submit their dividend mandate and CNIC directly to their broker (participant)/CDC.
Yours faithfully,
For Engro Fertilizers Limited
Company Secretary
SHAREHOLDERS SECTION:
I hereby communicate to receive my dividends directly in my Bank account as detailed below:
Shareholder details
Name of the Shareholder
CDC Participant ID & Sub Account No. / CDC IAS
CNIC / NICOP / Passport / NTN No. (Please attach copy)
Contact Number (LandLine & Cell Nos.)
Shareholders Address
Shareholder’s Bank account details

Title of Bank Account
IBAN (See Note 1 below)
Banks Name
Branch Name & Code No,.
Branch Address
It is stated that the above particulars given by me are correct to the best of my knowledge and I shall keep the Company informed in case of
any changes in the said particulars in future.
Shareholder’s Signature
Note: Please provide complete IBAN after checking with your concerned branch to enable electronic credit directly into your bank account)
The payment of cash dividend will be processed on the basis of the IBAN number alone. The company is entitled to rely on the IBAN number as per your instructions. The company
shall not be responsible for any loss, damage, liability or claim arising, directly or indirectly, from any error, delay, or failure in performance of any of its obligations hereunder which is
caused by incorrect payment instructions and /or due to any event beyond the control of the company.

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Company Folio / CDS Total Principal Shareholder Joint shareholder

Name & Shareholding Name & Shareholding

11) In pursuance to Circular No. 10 of 2014 dated

11 engro fertilizers annual report 2018

To boost sales, a full-fledged marketing organization was established which undertook

Zonal Sales Offices:

S. No. Description Address

• Fatality at E-Pond occurred during January which was a

• EPS of PKR 3.82

• DPS of PKR 4.0

• Dividend of PKR 4.0 per share announced • EPS of PKR 3.87

• DPS of PKR 3.0 announced

Following are our core values:

Ethics & Integrity

Health, Safety & Environment

Innovation & Risk Taking

Community & Society

Ethics & Code of Conduct

Engro Elengy Engro Engro Engro Engro Vopak Engro EngroEximp

EFert Agritrade Engro Elengy Engro

Abdul Samad Dawood

Asad Said Jafar

Asim Murtaza Khan

C o mm e rcia l Pro cure m e nt Agr ibusin e s s C or p orate Huma n M a nu factur ing

HSE a nd Z a r k h ez Administ Fina nc e &

Pro c e s s Pro du cti o n

Engro Fertilizers has been importing and marketing DAP in the

Urea is the most important and widely utilized Nitrogen fertilizer in

Enhance farmer Increase interaction at Improve local Will continue to

Corporate social Focusing on improving Number of lives On going

Indicators and Performance measures

3) Manufacturing excellence Treasury Management

ENTERPRISE RISK MANAGEMENT PROCESS D. Prioritization of Risk

A. Formulation of Strategy and Business Objectives E. Implements Risk Responses

• Stop specific activities by redefining objectives, refocusing Risk Assessment

Key Opportunity Impact Area Way Forward

Improvements in Manufactured The Company realizes the importance of

Availability of unutilized Natural Capital The Company is actively exploring

Develop Horizontal / Financial Capital The Company continues to explore

Frequency of Engagement Directors:

• Accounting estimates are based on reasonable and prudent judgement.

Asad Said Jafar Karachi

a. Audit Committee: Mr. Asad Said Jafar – Chairman

We specifically confirm that:

a. Investment Agency Agreement

Ghias Khan Nadir Salar Qureshi

engro fertilizers annual report 2018 86

Nadir Salar Qureshi

87 engro fertilizers annual report 2018

such as cricket, football, volleyball, chess, tennis,

Further, as part of our commitment to conserve

energy, we have successfully sustained “Green • Sponsorship of Quetta Gladiators-Pakistan

To facilitate process efficiency, attain internal

Office, all zonal offices and Zarkhez Plant.

Asad Said Jaffar-Chairman 3/4

Javed Akbar-Member 4/4

Sadia Khan-Member 2/4

Ghias Khan Nadir Salar Qureshi

Administrative expenses (296) (217) (299) (773) (1,585)

Earnings / Dividends Per Share

Quarter Wise Sales Volumes (KT)

2018 2017 2016 2015 2014 2013

Summary of Consolidated Statement of Profitability Ratios

Capital Structure Ratios

40,000 70,000 34.90